Stocks soared Wednesday, with the Dow up more than 500 points in afternoon trade Wednesday but oil futures didn’t follow suit.
Analysts said the equity rally wasn’t necessarily all about rising prospects for targeted fiscal stimulus in the near term, but might reflect the idea that a more sweeping package would be in store once the Nov. 3 presidential election is out of the way.
But crude oil suffered in electronic trade following Trump’s initial tweet and failed to find support as equities subsequently rebounded reported MarketWatch.
West Texas Intermediate crude for November delivery, the U.S. benchmark, fell 72 cents a barrel, or 1.8%, to $39.95 a barrel, while Brent crude , the global benchmark, dropped 66 cents, or 1.6% to $41.99 a barrel.
That might say something about the expected timing of a spending package, said Robert Yawger, director of energy at Mizuho Securities U.S.A., in a note.
The divergence between stocks and oil drew a lot of attention from traders, Yawger said. After all, recent oil-market gains had been attributed to rising hopes for an agreement on a new spending package that would help underpin domestic demand for gasoline.
“A stimulus deal would have been a positive demand indicator for energy demand, gasoline demand in particular. As people received their checks, they would drive more to spend more,” Yawger wrote.
Stocks had tumbled late Tuesday afternoon, with the Dow Jones Industrial Average swinging from a gain of more than 200 points to end the day down more than 400 points after President Donald Trump tweeted that he had called off stimulus talks with congressional Democrats until after the election. The S&P 500 logged a decline of 1.4% on Tuesday, while oil futures closed with solid gains ahead of the Trump tweet.
