The Dow Jones Industrial Average rose for a third straight session Wednesday to close above the psychologically important 18,000 for the first time in over a month as oil rallied to an 11-month high.
"Risk markets are taking the lead from commodities and the pop we have seen in oil is supportive of the market," said Mark Heppenstall, chief investment officer of Penn Mutual Asset Management. "It's hard to say the market has great momentum, but the index is still likely to test an all-time high to see what the air is like up there," he said.
The Dow Jones Industrial Average DJIA, +0.37% added 66.77 points, or 0.4%, to close at 18,005.05, led by a 2.5% gain in UnitedHealth Group Inc.
West Texas Intermediate crude CLN6, -0.12% the U.S. benchmark, rose 87 cents, or 1.7%, to finish at $ 51.23 a barrel, its first close above the $ 51 level since July 2015.
The S&P 500 also gained for a third session, closing above 2,100 points — an important level that, according to analysts, could determine whether the large-cap index will push toward a record high. The S&P 500 SPX, +0.33% advanced 6.99 points, or 0.3%, to close at 2,119.12, moving within sight of its 52-week high of 2,128.28 and its record 2,130.82 set on May 21, 2015. Materials and industrial shares led the gains.
"Seeing the Dow, along with the S&P 500, finally eclipse their all-time highs from the spring of 2015 would be the bullish development over the near term," said Frank Cappelleri, director of institutional equities at Instinet LLC.
The Nasdaq Composite COMP, +0.26% rose 12.89 points, or 0.3%, to end at 4,974.64.
Hints from Federal Reserve Chair Janet Yellen this week that the next interest-rate hike might be pushed back are also bolstering sentiment.
"I think the market is riding the Yellen dovish commentary," said Ian Winer, managing director at Wedbush Securities. "By taking the timetable commentary out of her thoughts on the next rate hike, it has encouraged more demand in equities."
The equity market resumed its strong correlation with moves in oil prices in the last few sessions, said J.J. Kinahan, chief strategist at TD Ameritrade.
The correlation between oil and stocks had somewhat eased in the last two months, falling from the peak reached in February and March, Kinahan said. But it has reappeared recently, after Yellen suggested Monday the next interest-rate hike might be pushed back.
Amid tumbling rate-hike expectations, "oil is something to trade on after the Fed is out," Kinahan said.
Still, "it has been a slow crawl higher in the wake of last Friday's U.S. employment report and the subsequent dovish tone to Yellen's speech on Monday," said Simon Smith, chief economist at FxPro, in a note. "Once again, this demonstrates the waning impact that low rates and monetary policy in general is having on stocks and asset markets in general," he added.
Investors mostly shrugged off the news that companies had a record number of open jobs in April.
But the softer dollar, which weakened to its lowest level in a month, boosted investor appetite for stocks, said John Conlon, chief equity strategist at People's United Wealth Management. That's largely because a weakening buck is expected to boost U.S. corporate earnings after the dollar's strength battered corporate earnings, especially among exporters, over recent quarters, Conlon added.
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Stocks to watch: Lululemon Athletica Inc. LULU, +4.90% shares were up nearly 5% after the yoga-wear retailer reported earnings and gave a second-quarter sales forecast that was largely below expectations.
UnitedHealth UNH, +2.53% gained after the company raised its quarterly dividend by 25%.
Amazon.com Inc. AMZN, +0.40% climbed 0.4% after the company announced plans to invest $ 3 billion in India, with CEO Jeff Bezos saying he sees "huge potential" in that economy.
Yahoo Inc. YHOO, +0.65% was up 0.7% after the company said it is aiming to raise $ 1 billion in an auction of about 3,000 patents.
Dave & Buster's Entertainment Inc. PLAY, +10.25% jumped 10% after the company late Tuesday raised its yearly outlook and said its board approved a $ 100 million share buyback plan.
Gevo Inc's. GEVO, +59.08% share skyrocketed 59% after the company said Tuesday the first two commercial flights using its renewable alcohol-to-jet fuel technology were flown by Alaska Airlines ALK, +0.09%
Catabasis Pharmaceuticals Inc. shares CATB, -26.28% plummeted 26% after the biotech company said its cholesterol treatment missed its study goal.
Other markets: Asian stocks were mixed, with Japan's Nikkei Average NIK, -0.97% up 0.9%, but the Shanghai Composite SHCOMP, -0.30% down 0.3%.
The dollar index DXY, +0.20% was down 0.2%, while gold futures GCQ6, +0.01% were up over 1%.
European stocks SXXP, -1.09% were lower. Attention was turning to the bond market as the European Central Bank began purchasing corporate bonds.
–Carla Mozée contributed to this column.
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