Stocks close higher, snap three-day losing streak despite oil slide

U.S. stocks closed higher Thursday, well off session highs, but mostly shook off pressure from further decline in oil prices as beaten-down sectors such as energy were among the top gainers. ( Tweet This )

"What we really need is to see a market that can trade higher agnostic to oil prices," said Art Hogan, chief market strategist at Wunderlich Securities.

"Breaking that correlation with WTI, ... that is a head turner," he said.

The Dow Jones industrial average ended about 80 points higher after gaining as much as 205 points, with Boeing and Chevron contributing the most to gains. The Nasdaq composite ended about 0.4 percent higher after briefly gaining 1 percent, with Apple and the iShares Nasdaq Biotechnology ETF (IBB) both posting gains but off session highs.

"You've got the market rebounding after a three-day steep sell-off that brought the Dow, S&P and Nasdaq (near) their 200-day moving averages, a perfect area for support," said Adam Sarhan, CEO of Sarhan Capital.

"In general, when you step back, we're still range-bound," he said. The major averages have closed lower for five out of the last seven sessions (including Thursday), and are on track for weekly losses of more than 1.5 percent.

The Dow transports ended about half a percent higher after briefly gaining more than 1 percent, with airlines leading advancers.

"You do want to see the market moving higher and not so linked to low oil prices because low oil prices will contribute to a strong consumer," said Quincy Krosby, market strategist at Prudential Financial.

Health care surpassed energy in the close as the top S&P 500 advancer. Earlier, energy briefly gained more than 2 percent. The sector is second to financials as the worst performer in the S&P for the week so far.

"I think you're getting speculation that maybe some of oil is overdone and (investors) start to look for a bargain. The energy space is hit so hard. We've been down so much in such a short period of time," said Robert Pavlik, chief market strategist at Boston Private Wealth. In the longer term, he expects oil to move even lower to around $32 a barrel.

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Pavlik also attributed some of Thursday's gains to money coming back into the market after tax-loss selling.

U.S. crude oil futures settled down 40 cents, or 1.08 percent, at $36.76 a barrel. Earlier, crude it a fresh near-seven-year low of $36.52 a barrel. OPEC said its November production reached a 2009 high, according to Dow Jones.

Five-day performance

Analysts also noted markets remain on edge ahead of the potentially historic Federal Reserve meeting next week, when the central bank could raise rates for the first time in nearly a decade.

"In many ways the market is trying to move beyond oil to next week's event, which is the Fed," said Dan Farley, regional investment strategist for The Private Client Reserve at U.S. Bank.

"The biggest short-term risk to the market is they don't raise," he said.

As of the close Thursday, CME's FedWatch tool showed markets are pricing in a more than 80 percent chance of a December hike.

The Fed "has been such an anticipated event people are on the edge of their seats for no reason," said JJ Kinahan, chief strategist at TD Ameritrade. He noted the VIX is up about 30 percent for the week so far, indicating "there's still a lot of nervousness in the market."

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, held little changed near 19.

Stocks kicked off Thursday's session mixed, with the S&P 500 and the Nasdaq composite trading slightly positive, and the Dow Jones industrial average lower. The three major indexes later tried for gains.

Read MoreOPEC predicts rivals' supply to contract in 2016

On Wednesday, U.S. stocks closed lower in choppy trade as oil prices weighed and as investors tried to position themselves ahead of a possible Fed rate hike. The Dow gave up triple-digit gains and dropped over 150 points at its lows.

"I think we're seeing a market that is discounting a Fed rate hike ... and lower oil prices," said Peter Cardillo, chief market economist at First Standard Financial. "From a technical perspective, the S&P 500 managed to hold the 2,040 level."

Investors also digested two economic data sets Thursday morning, with initial jobless claims rising to 282,000. Economists polled by Reuters expected the number to come in at 269,000.

"The level of firings remains muted as in a tight labor market with near 40 year lows in participation employers are holding tight to the employees they have (outside of energy and manufacturing)," Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.

Meanwhile, import prices fell 0.4 percent in November, as oil prices weighed, the Labor Department said.

Treasury yields held mostly higher, with the 2-year yield at 0.96 percent and the 10-year yield at 2.23 percent in the close.

The U.S. dollar recovered from a dip to trade about half a percent higher against major world currencies, with the euro holding above $1.09 and the yen at 121.62 yen against the greenback in the close.

In corporate news:

American International Group announced Thursday that four of its top 15 executives will be leaving the insurance company as part of a management restructuring. The stock closed down nearly 2 percent.

Chevron gained nearly 2 percent after it said it plans to cut its budget by 24 percent next year as oil prices are expected to remain low. Reuters noted the dramatic cutback in spending is likely to be echoed by other oil majors who will soon release spending plans, with rival ConocoPhillips set to release its 2016 budget on Thursday.

Glencore said it aims to cut net debt by almost $3 billion to $13 billion by the end of next year, CEO Ivan Glasenberg said. The firm also plans to cut capital spending to $3.8 billion in 2016, down from $5 billion. Shares jumped 7 percent in London trade.

Moody's Investors Service downgraded all ratings for Petrobras to Ba3 from Ba2 and placed them on review for possible further downgrade. Moody's also put Brazil's Baa3 rating on review for downgrade. U.S.-listed shares fell more than 5 percent.

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The Dow Jones industrial average closed up 82.45 points, or 0.47 percent, at 17,574.75, with Chevron leading advancers and United Technologies the greatest decliner.

The S&P 500 closed up 4.61 points, or 0.23 percent, at 2,052.23, with health care leading eight sectors higher and utilities and materials the only laggards

The Nasdaq composite closed up 22.31 points, or 0.44 percent, at 5,045.17.

Decliners were a touch ahead of advancers on the New York Stock Exchange, with an exchange volume of 872 million and a composite volume of 3.7 billion in the close.

Gold futures for February delivery settled down $4.50 at $1,072.00 an ounce.

On tap this week:


4:30 p.m.: Fed balance sheet/money supply


8:30 a.m. Retail sales; PPI

10 a.m.: Consumer sentiment; business inventories

1 p.m.: Rig count

*Planner subject to change.

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