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U.S. Stocks Climb as Oil Prices Stabilize Corrie Driebusch Updated Dec. 22, 2015 3:35 p.m. ET U.S. stocks gained on Tuesday as commodity prices crept higher. The Dow Jones Industrial Average rose 196 points, or 1.1%, to 17447. The S&P 500 climbed 1%, and the Nasdaq Composite gained 0.7%. Stocks have been volatile over the past few weeks, with weakness in commodities dragging down the broader market. This week stock-trading volumes have begun to wane ahead of the Christmas holiday, traders said, allowing stocks to drift higher. “We’re seeing a lot of indecision in this market,” said Daniel Morgan, senior portfolio manager at Synovus Trust Co. “There seems to be all this negativity in the outlook going forward, with the consensus that rates will go up, corporate earnings are at risk, and we’re not quite sure if energy is going to turn around. At the same time, where else are you going to go?” U.S. stocks are still attractive relative to other asset classes and many stock markets around the globe, he said, making it tough to cash out even if investors are pessimistic about 2016. “That’s why you’re seeing this market sway back and forth,” he said. In day-to-day trading, a key barometer of whether stocks can sustain gains has been the price of oil, traders said. On Tuesday, U.S. oil prices climbed 1.5% to $36.36 a barrel following steep declines in recent weeks. The gains in the price of oil also helped steady the high-yield market, with junk bonds generally trading higher. The largest high-yield bond exchange-traded fund by assets, the iShares iBoxx $ High Yield Corporate Bond ETF, HYG 1.17 % rose 0.9% in recent trading. Bonds from some energy firms were among the biggest gainers, including debt from Transocean, Whiting Petroleum WLL 7.70 % and Oasis Petroleum. Concerns about U.S. high-yield debt and the energy sector have kept a lid on gains, traders and investors say. “Credit spreads are pointing toward a weak stock market,” said Mr. Morgan, though he added as long as U.S. GDP doesn’t turn negative, he doesn’t foresee a catastrophic pullback.
The U.S. economy expanded at a slightly slower pace than initially estimated in the third quarter, data showed Tuesday. Gross domestic product grew at a 2.0% annual rate in the third quarter, the Commerce Department said, less than its previous estimate of 2.1%. Economists surveyed by The Wall Street Journal had expected growth of 1.9%. Some investors remain skeptical of the stabilization across markets, and say they expect more weakness in stocks in the new year. “The stock market is digesting a slowdown,” said James Abate, chief investment officer of Centre Funds and portfolio manager of the Centre American Select Equity Fund. As a result, Mr. Abate said he is finding fewer companies that he believes will be able to generate returns and improve margins. He said he currently holds 51 stocks in his strategy, the fewest individual companies since early 2000, though he was at a different firm at that time. The Stoxx Europe 600 fell 0.1%. Spain’s IBEX 35 stock market index rose 0.5%, following a 3.6% decline Monday after inconclusive elections over the weekend raised fears among investors that the country would face a prolonged period of uncertainty. The U.K.’s resource-heavy FTSE 100 index rose 0.8%. In Asian trade, the Shanghai Composite Index added 0.3% after Chinese leaders approved an economic blueprint for next year that aims to rebalance the world’s second-largest economy and find new sources of growth. —Riva Gold and Mike Cherney contributed to this article. Write to Corrie Driebusch at corrie.driebusch@wsj.com