Supply disruptions boost energy sector
Crude oil futures hit a six-month high as output disruptions were expected to cut into a long-standing glut in the market, while stocks rose sharply, boosted by basic materials and energy shares.
Supply disruptions in Nigeria, Canada and Venezuela have most likely pushed oil production below consumption levels this month for the first time in at least two years.
That means the world has started eating into the huge stockpile of oil that has knocked as much as 70 percent off crude prices between 2014 and early 2016.
The energy sector led Wall Street higher following a third-consecutive week of declines on the S&P 500.
"Oil is the catalyst but the move today wouldn't have been this big if stocks had not been this weak lately," said Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis.
He said the move in oil and other commodities "is creating a sense that there's a shot this rally could get some legs and people hate to miss out".
The Dow Jones industrial average rose 175.39 points, or one percent, to 17,710.71, the S&P 500 gained 20.05 points, or 0.98 percent, to 2,066.66 and the Nasdaq Composite added 57.78 points, or 1.22 percent, to 4,775.46.
Oil prices rose sharply, partly after Goldman Sachs said disruption to supply had seen the market flip into deficit and US crude could trade as high as US$50 per barrel in the second half of 2016.
Brent crude hit US$49.47 per barrel, its highest since early November.
The international benchmark, which has risen nearly 80 percent from lows touched in January, last traded at US$49.05, up 2.6 percent on the day.
US crude was up 3.6 percent at US$47.87.
US Treasury yields rose as prices fell despite a weaker-than-expected reading in the New York Fed manufacturing survey, as traders focused on the gains in the oil market.
"A lot of the overnight data has been kind of weak and people have just roundly ignored it," said Aaron Kohli, interest rates strategist at BMO Capital Markets in New York.
"Everyone was just focusing on crude this morning."