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Crude Oil Fuels Wall Street’s Best Two-Day Gain in Two Months

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Wall Street kicked losses to the curb again on Wednesday, thanks to a drop in crude oil supplies that buoyed the energy industry.

The S&P 500 added 0.69%, and the Nasdaq gained 0.7%. The Dow Jones Industrial Average rose 0.81%, pushing the blue-chip index into positive territory for the month.

U.S. crude stocks fell by 4.2 million barrels in the past week, according to the Energy Information Administration, backing up an American Petroleum Institute report that showed inventories fell by 5.1 million. The API reading was double what analysts had expected.

West Texas Intermediate crude oil rose 1.9% to close at $49.56 a barrel Wednesday, its highest settlement since Oct. 9. Major oilers Exxon Mobil (XOM) , Royal Dutch Shell (RDS.A) , PetroChina (PTR) and Chevron (CVX) were higher, while the Energy Select Sector SPDR ETF (XLE) rose 1.6%.

U.S. stocks enjoyed a big rally on Tuesday, too, as Wall Street finally came to grips with the potential for an interest rate hike in June following a week of worry. A June rate hike has odds of roughly 30%, according to CME Group, after starting the month at less than 10%.

Current labor data suggests it’s time for the central bank to implement another rate hike, St. Louis Federal Reserve President James Bullard told CNBC, adding to the chorus of Fed members who support a hike sooner than later. Bullard noted that rate hikes were by no means definite and that the Fed would continue to analyze incoming data.

“While we disagree that lackluster, moderate conditions ‘warrant’ a second rate increase in June, policy officials appear well-positioned to offer a near-term rate hike given the threshold for a further removal of accommodation has been lowered so dramatically,” said Lindsey Piegza, chief economist at Stifel. “The Fed is not looking for strong or solid, ‘moderate’ is good enough.”

The U.S. deficit in international goods trading widened to $57.5 billion from $55.6 billion. Analysts had expected the deficit to widen further to $60.2 billion. Non-automotive consumer goods imports rose 0.8% month-on-month after a 9.9% decline in March.

“While the narrower-than-expected trade deficit spells stronger real GDP growth in [the second quarter], the underlying sluggishness in consumer-goods imports warrants attention,” Barclays’ Jesse Hurwitz wrote in a note. “Some domestic retail sectors, particularly clothing and apparel stores, have reported rising inventory levels in recent months that could be responsible for the near-term slowdown in import demand.”

AT&T (T) is reportedly interested in buying Yahoo! (YHOO), according to Bloomberg. Fellow telecom Verizon (VZ) has also expressed interest in the Internet company as it spins off its core business. Yahoo’s sales process is expected to end in the next few weeks.

Alibaba (BABA) tumbled on news of an investigation by the Securities and Exchange Commission. The SEC plans to review data reported from Singles Day, a massive online-sales holiday akin to Cyber Monday. The China-based e-commerce site said it didn’t know when the investigation would conclude.

Hewlett Packard Enterprise (HPE) surged 6.7% after announcing plans to spin off its enterprise services unit, which will then merge with Computer Sciences (CSC). HPE shareholders will hold 50% of the newly formed company. Computer Sciences rocketed 37% higher.

Microsoft (MSFT) announced plans to lay off 1,850 workers, another step in its moves to streamline the cellphone hardware business acquired from Nokia. The tech giant will take a restructuring charge of roughly $950 million in the current quarter.

Tiffany & Co. (TIF)  rose slightly despite issuing a soft forecast for the full year. The jeweler expects full-year earnings to fall by mid-single-digit percentages, above consensus for a 1.8% drop. The company blamed lower tourist spending in Europe, the U.S. and Asia.


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