Retail Macy’s ($M) and Kohl’s ($KSS) Gain Energy ($XLE)!

Stocks opened modestly higher and are building on the gains through midday Thursday. The S&P 500 is up 10.86 points to 2186.35 and on pace to close at record levels.

Treasury bonds are seeing modest weakness following an in-line reading on jobless claims and as equities tick higher. The yield on the benchmark ten-year edged up to 1.53% Thursday, but well off of Monday’s highs near 1.6%.

Meanwhile, crude oil is up $1.17 to $42.88 and gold added $4.5 to $1356.50.

On Wall Street, Energy (XLE) is the best performing sector as crude bubbles higher. Consumer Discretionary (XLY) is seeing strength thanks partly to post-earnings gains in Macy’s (M) and Kohl’s (KSS). Industrials (XLI) and Tech (XLK) are also outperforming. Telecomm (IYZ) and Utilities (XLU) are the only losers among the S&P sectors.

CBOE Volatility Index (VIX) is off .44 to 11.61 and the light summer volumes persist, with roughly 2.3 million calls and 2.3 million puts traded across the exchanges in the first 90 minutes Thursday. Projected volume for the day is 13.1 million and 10% below the one-month daily average.

VIX Sep 24 calls, iShares Emerging Markets Fund (EEM) Oct 34 puts, and Alibaba (BABA) Oct 100 calls are among the most actives into midday.

Looking forward, the earnings season is winding down and, outside of handful of retailers, the majority of reports are now behind us. According to Zack’s, of the 92% of S&P 500 companies to have reported, total earnings were down 3.7% for the period on .7% lower revenues. Still, with more than 70% of companies beating analyst estimates, the S&P 500 is forging record highs despite the lackluster overall results.

A nearly 2% rally in the energy sector is certainly helping matters Thursday and the chart below shows the SPDR Energy Fund successfully testing its 50-day moving average after two days of weakness Tuesday and Wednesday. XLE is one of ten sector ETFs that collectively hold all of the S&P 500 companies by sector and holds shares of all of the oil and gas names.

See Tradespoon’s Stock Forecast on SPDR TR-SBI INT-ENERGY (XLE)

Tradespoon’s Stock Forecast on SPDR TR-SBI INT-ENERGY (XLE)

As focus begins to shift away from earnings and back to the macro front, the performance of the energy sector will certainly be worth noting given the implications for the economy and the overall market. Energy was certainly a big driver for the S&P 500 in the first half of 2016.

XLE seems to have some support at the aforementioned 50-day moving average, $68, and $66.75 per share. Resistance at $68.50, $69, and $69.50. Meanwhile, the S&P 500 faces resistance at Tuesday’s intraday high near 2187. Short-term support likely at 2182, 2175 and 2169.