U.S. stocks rose modestly on Wednesday, with energy companies leading the advance as oil prices jumped to a 3 1/2-year high.
The energy gains came as traders digested President Donald Trump’s decision a day earlier to pull the U.S. out of the Iran nuclear deal and resume sanctions against the oil-producing nation. However, uncertainty over the broader fallout to the decision could limit gains.
What are markets doing?
The Dow Jones Industrial Average DJIA, +0.12%[1] rose 37 points, or 0.2%, to 24,399. The S&P 500 SPX, +0.28%[2] gained 6 points to 2,678, a gain of 0.3%. The Nasdaq Composite Index COMP, +0.08%[3] added 10 points, or 0.1%, to 7,277.
Energy shares jumped 1.7%, by far the biggest outperformer among the 11 primary S&P 500 sectors. Material stocks rose 0.6% while industrial names were up 0.4%.
What is driving the market?
A rally in oil prices[4] helped lift U.S.-listed energy companies in premarket action, which pushed stock-index futures higher. West Texas Intermediate oil CLM8, +2.52%[5] jumped 2.6% while Brent LCON8, +2.61%[6] was up 2.5%. Trump said the U.S. intends to impose sanctions on Iran, curbing the country’s oil exports and tightening global oil supply.
Read: Why oil prices didn’t rally Tuesday after Trump announced ‘powerful’ Iran sanctions [7]
The jump in oil coincided with a rise in Treasury yields, as rising energy prices can lift inflation expectations, which are bearish for bonds that have a fixed value. Rising inflation also could put pressure on the Federal Reserve to raise interest rates more aggressively. The yield on 10-year U.S. notes TMUBMUSD10Y, +0.73%[8] rose back above 3%[9]. The dollar DXY, -0.14%[10] was higher earlier in the premarket session, but edged lower, off 0.1% at 93.04, as the opening bell...