By Caroline Valetkevitch and Amanda Cooper
NEW YORK/LONDON (Reuters) -Oil prices surged about 5% on Thursday after Washington imposed sanctions on major Russian companies over the Ukraine war, while major stock indexes edged higher as gains in U.S. and European energy shares helped to offset some lackluster earnings news.
The sanctions, announced late Wednesday, were placed on major Russian suppliers Rosneft and Lukoil. The U.S. said it was prepared to take further action as it called on Moscow to agree immediately to a ceasefire in Ukraine.
Wall Street indexes were higher, with energy leading sector gains on the S&P 500 index. The energy sector was last up 1.2%.
A clutch of positive earnings reports also helped to support stocks. However, market pressure came as International Business Machines shares fell 3.7% after the company recorded a slowdown in growth in its key cloud software segment.
Also, shares of Tesla were down 2.5% after the electric vehicle maker late Wednesday extended its streak of profit misses to a fourth quarter.
“In general, the (stock) market is responding to earnings, which for the most part continue to be good. And the other factor is that Trump placed severe sanctions on major Russian oil companies, which is being applauded by the market. You can see that in the energy sector,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
The Dow Jones Industrial Average rose 15.86 points, or 0.03%, to 46,606.27. The S&P 500 climbed 20.19 points, or 0.30%, to 6,719.59 and the Nasdaq Composite advanced 111.44 points, or 0.49%, to 22,851.83.
MSCI’s gauge of stocks across the globe rose 2.24 points, or 0.23%, to 993.01.
The pan-European STOXX 600 index rose 0.35%.
Chinese stocks closed up 0.3%, having recovered from a 1.1% drop after sources said the White House was considering a plan to curb an array of software-powered exports to China in retaliation against Beijing’s latest round of rare earth export restrictions.
Oil futures were in focus after the latest Russia sanctions news. European Union countries also approved a 19th package of sanctions on Moscow that included a ban on Russian liquefied natural gas imports, while Britain hit Rosneft and Lukoil with sanctions last week.
U.S. crude was last up 5.2% at $61.54 a barrel and Brent was at $65.65 per barrel, up 4.89% on the day.
U.S. Treasury yields also rose following the sanctions news, while investors braced for a key reading on U.S. inflation on Friday.
The benchmark U.S. 10-year Treasury note yield rose 3.3 basis points to 3.986% after hitting a session high of 3.997%.
