By Riva Gold and Michael Wursthorn
-- Major stock indexes edge higher
-- Treasury yields hover near recent highs
-- European stocks rise
Energy stocks jumped Thursday to lead major indexes higher, as investors continued to bet that oil-and-gas companies' fortunes will rise alongside oil prices.
The S&P 500 added 0.4% in recent trading. Energy companies in the broad index jumped more than 1%, pulling the S&P 500 out of an early-morning slide and putting it on track for a second straight day of gains.
The Dow Jones Industrial Average added 64 points, or 0.3%, to 24832, while the Nasdaq Composite gained 0.3%.
Energy companies continued their torrid pace of gains and are on track to post their best quarter since late 2011.
Oil prices have rallied in 2018 to hit levels that haven't been seen in years. Brent crude, the global oil benchmark, climbed past $80 a barrel, and the U.S. oil benchmark, West Texas Intermediate, edged further past $70.
The spike in oil prices has given energy companies a massive boost, with many expected to report big gains in profit and revenue thanks to the climbing commodity costs. Energy companies in the S&P 500 have added 16% since the end of March, better than the 10 other sectors in the broad index, including shares of technology companies, which are only up 4.5% over the same time.
Valero Energy led the S&P 500 higher Thursday and added nearly 5% after Morgan Stanley analysts upgraded the stock, encouraging investors to grab shares. Marathon Petroleum, Halliburton and Phillips 66 all added more than 3%.
Rising commodity prices have contributed to higher inflation expectations, pushing bond yields higher. Yields on 10-year Treasury notes rose Thursday to 3.106% from 3.093% late Wednesday, which was the highest settlement since 2011. Yields move inversely to prices.
Some investors worry that higher yields and higher interest rates could hurt stocks by raising borrowing costs for companies and making bonds look more attractive in comparison.
"We think 3.25% would be the number that would cause us to lean a little bit more forward in our chair," said Eric Freedman, chief investment officer at U.S. Bank Wealth Management. Already, more attractive yields on shorter-dated U.S. debt have prompted U.S. Bank to shift some of its investments out of the stock market and into short-term paper, he said.
Elsewhere, stocks in Hong Kong and Australia closed lower, while the Stoxx Europe 600 edged up 0.6% as shares of Ocado Group jumped after the U.K. online supermarket said it has agreed to sell a 5% stake to Kroger and that it would provide its delivery technology to the U.S. grocer.
Earlier, Japan's Nikkei rose 0.5%, supported by a recent decline the yen, which tends to boost earnings of multinationals translating earnings from abroad. The dollar was last up 0.3% against the yen for the day and up 1.3% against the Japanese currency for the week.
Shares elsewhere in Asia mostly ended the day lower. Hong Kong's Hang Seng fell 0.5% despite a rebound in shares of Tencent Holdings, Asia's most valuable company.
Write to Riva Gold at [email protected] and Michael Wursthorn at [email protected]