May 9, 2018 / 4:06 PM / 14 days ago

US STOCKS-Wall St higher as energy stocks gain on oil rally

* U.S. 10-year bond yield tops 3 pct

* Walmart drops on $16 bln deal for India’s Flipkart

* Oil continues ascent, at highest levels since 2014

* Indexes up: Dow 0.08 pct, S&P 0.27 pct, Nasdaq 0.14 pct (Changes comment,)

By Sruthi Shankar

May 9 (Reuters) - Wall Street was higher on Wednesday, with energy shares getting a boost from a surge in oil prices after President Donald Trump pulled the United States out of a nuclear deal with Iran.

The S&P energy index rose 1.9 percent after oil prices hit their highest levels in 3-1/2 years as investors worried that Trump’s decision would increase risks of conflict in the Middle East and curtail oil supplies in a tight market.

The energy sector has risen more than 10 percent so far in the quarter, far outperforming the other major S&P indexes.

However, a 3.5 percent drop in Walmart limited gains on the Dow after the retailer took a majority stake in Indian e-commerce firm Flipkart for about $16 billion.

“Oil is probably not helping, it’s a kind of a potential inflation indicator,” said Mark Travis, chief executive officer of Intrepid Capital Funds in Jacksonville Beach, Florida.

“The underlying challenge for the financial markets is not so much whether Trump does or doesn’t do anything. It is the impact of the rates rising facing an expensive capital markets.”

The U.S. 10-year Treasury yield rose to a two-week high and above the key 3 percent level on expectations of higher interest rates.

At 11:24 a.m. EDT the Dow Jones Industrial Average was up 18.37 points, or 0.08 percent, at 24,378.58, the S&P 500 was up 7.16 points, or 0.27 percent, at 2,679.08 and the Nasdaq Composite was up 9.96 points, or 0.14 percent, at 7,276.87.

Six of the 11 major S&P sectors were higher, with the financial sector’s 0.6 percent rise providing the second biggest boost to the benchmark index.

The yield-sensitive utilities and telecom services were down about 0.7 percent each.

Walt Disney dipped 2.1 percent. The media company, which is in the process of buying film and TV assets from Twenty-First Century Fox, reported quarterly profit that topped Wall Street forecasts.

Advancing issues outnumbered decliners by a 1.06-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 1.06-to-1 ratio on the Nasdaq.

The S&P index recorded 28 new 52-week highs and 9 new lows, while the Nasdaq recorded 119 new highs and 37 new lows. (Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D’Silva)

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