Major Indexes Get Lift From Lower Oil Prices
A pullback in oil prices helped bring bargain hunters back to Wall Street on Monday, sparking a broad rally.
The Dow Jones industrial average gained 129.20 points, or 1.3%, to 9,954.55, its second straight advance.
In commodities trading, near-term crude oil futures in New York rose as high as $46.91 a barrel but ended the day at $46.05, down 53 cents, after Venezuelan President Hugo Chavez survived a recall referendum on Sunday.
Oil traders had feared that crude production in the oil-rich nation would be interrupted by Chavez’s supporters if he had been ousted.
Oil repeatedly has hit record highs in recent weeks, powered by worries about possible supply disruptions in the Middle East, Nigeria, Russia and Venezuela.
Analysts said the market still was extremely nervous over the situation in Iraq, where two weeks of continuous fighting between U.S. troops and Iraqi insurgents have put the nation’s oil infrastructure at risk.
On Wall Street, stocks rose from the outset of trading Monday, building on Friday’s small rally, when the Dow edged up 10.76 points.
Key indexes had closed Thursday at their lowest levels of the year, beaten down for weeks by worries over the economy, oil prices, terrorism threats and other concerns.
Trading was subdued Monday. But winners topped losers by more than 2 to 1 on the New York Stock Exchange and Nasdaq.
The technology-dominated Nasdaq composite index jumped 25.62 points, or 1.5%, to 1,782.84.
The Standard & Poor’s 500 index added 14.54 points, or 1.4%, to 1,079.34.
Year to date, Nasdaq is down 11% and the S&P; 500 is off 2.9%. But “the economy is better than what the stock market says,” Mark Roach, who helps manage $3.6 billion at Vaughan, Nelson, Scarborough & McCullough in Houston, told Bloomberg News.
Market bulls have contended that stocks are suffering a typical “correction” in a bull market, and that the outlook for corporate earnings justifies higher share prices.
As for oil, the price “is getting close to a top,” Stuart Schweitzer, global investment strategist at J.P. Morgan Fleming Asset Management, told Bloomberg. “It will recede. We’ll feel better about things down the road.”
As stocks rose Monday some investors cashed out of Treasury bonds, driving yields up modestly.
The 10-year T-note yield ended at 4.27%, up from 4.23% Friday. Long-term Treasury yields have fallen in recent weeks to their lowest levels since April on concerns the economy might continue to slow.
In other trading, the dollar rose slightly after the Treasury said foreign investors increased their purchases of U.S. securities in June.
Among the day’s market highlights:
* Technology stocks rebounding from the sector’s recent heavy sell-off included Qlogic, up 69 cents to $22.83; Adobe Systems, up $1.40 to $44.87; and Yahoo, up 76 cents to $28.25.
But Intel slipped 14 cents to $21.42 and Apple Computer was off 6 cents to $30.78.
* Retail stocks were broadly higher, led by Kmart, which surged $11.15 to $76.05 after reporting a second-quarter profit. Also, Lowe’s soared $2.49 to $49.14 on its profit report.
Other retail winners included J.C. Penney, up $1.04 to $38.75; Sears, up $1.40 to $37.15; and Zale, up $1.38 to $26.05.
Pier 1 Imports rallied 77 cents to $16.24, then jumped to $17.20 in after-hours trading. Billionaire investor Warren Buffett’s Berkshire Hathaway disclosed that it owned 8 million shares of Pier 1 as of the second quarter.
* Among Internet retailers, Amazon.com jumped $1.82 to $37.95 and Blue Nile surged $2.34 to $25.05.
* Shoe stocks attracted buyers. Nike gained $2.11 to $71.80; Timberland rose $2.77 to $56.22.
* Time Warner rose 59 cents to $16.21. The stock may gain under Chief Executive Dick Parsons, who is cutting debt, improving profit and promising to structure acquisitions in a way that will minimize the use of capital, Barron’s reported.
* Pixar, the animation studio, jumped $2.27 to $72.20, its seventh straight advance and the highest closing level since September.
* The Dow Jones utility stock index added 2.24 points, or 0.8%, to 285.41, a two-year high. It is up 6.9% this year. Within the index, Dominion Resources was up 84 cents to $64.38, NiSource gained 48 cents to $21.02 and TXU rose 48 cents to $40.79.
But Aquila plunged 74 cents to $2.34 after the Kansas City, Mo.-based utility said it would sell 40 million shares to help pay debt.
* Banking stocks helped to pace the market’s advance. Bank of America rose $1.14 to $86.10, a record high. Also hitting a record was Wilshire State Bank, up $1.77 to $29.99.
* InSight Health Services of Lake Forest, Calif., was the latest company to withdraw a planned initial public stock offering. The medical imaging company had hoped to raise as much as $675 million.
