U.S. stocks closed higher on Tuesday after three consecutive sessions of declines. The market reversed for the positive late in the day following a Financial Times report stating European Union finance ministers are investigating methods for coordinating recapitalization of financial institutions. The reported added vigor to a sullen market bolstered sectors across the board, but most notably attribute to a rise in ailing oil & gas stocks.
Oil and gas stocks have taken a hit in recent months as the price of crude has tumbled alongside speculation of a potential double dip and ongoing discussion surrounding European debt contagion. Flat economic growth in the U.S. and slowing expansion in China has sounded the alarm for oil investors who anticipate less use for oil in a more languid economy.
Those fears extended into morning trading pushing crude down to just above $75 per barrel, the first time below $76 in over a year.
Oil’s decline; however, was not reflected in oil and gas stocks from Exxon (XOM) to Marathon (MRO), which regained some strength on the late-day news following three days of declines. After falling in the earlier part of the day, Exxon managed to close higher. The company, in spite of the litany of economic troubles, has been among the stronger survivors on the sector. Exxon is down only .4 percent YTD, against competitors like Marathon, which has tumbled 43.05 percent in the same time frame. Recent sentiments for Marathon are much improved compared with assessments earlier in the year following a unit spin-off at the company. At least one analyst that had previously assessed the company at a sell now upgraded it to a buy after adjusting its estimates for a higher average price of oil.
Elsewhere in the sector, Alpha Natural (ANR) and Consol Energy (CNX) both began their own ascent. In spite of a considerable rally for the day, Alpha remains 70 percent below its 52-week high. Consol mirrored Alpha’s improvements but remains down around 30 percent for the year.
One component that bucked the greater trend was NRG Energy (NRG) which fell sharply following its announcement that a Texas heat wave caused a necessary buy of merchant market power at elevated prices. The company cut their earnings estimates to $.78 billion from nearly $2 billion, prompting a hard sell among investors.
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