Stocks Close Up Despite Record Price for Oil
Stocks enjoyed a late-day rally Wednesday, finishing broadly higher even as oil prices rose to another record and bond yields jumped. Trading volume was moderate as investors awaited the government’s September employment report on Friday.
Soaring oil prices seem to have lost their ability to shock investors, at least for now.
“The market’s been shrugging off the rally in crude,” David Hegarty, head of trading at Commerzbank Capital Markets in New York, told Bloomberg News. “I’m hearing optimism.”
Crude oil futures in New York jumped 93 cents to $52.02 a barrel after the government reported a smaller-than-expected, 1.1-million-barrel rise in U.S. oil inventories last week, to 274 million. The news added to concerns about energy supplies entering the winter heating season.
But on Wall Street, the stock market edged higher for much of the session, then shot up in the final hour. The Dow Jones industrial average gained 62.24 points, or 0.6%, to 10,239.92.
Broader indexes also closed higher. The Standard & Poor’s 500 index added 7.57 points, or 0.7%, to 1,142.05 -- just 1.4% below its multi-year high of 1,157.76 reached Feb. 11.
The Nasdaq composite rose 15.53 points, or 0.8%, to 1,971.03.
Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange.
Despite rising energy costs, optimism about the economy could be bolstered if the Labor Department on Friday reports a bigger-than-expected gain in September job creation, analysts said.
Investors also are watching for positive signs in third-quarter earnings reports, following a number of profit warnings in recent weeks from companies such as Coca-Cola and Pulte Homes.
“What you would hope now is that we’ll see some upside surprises,” said Janna Sampson, co-manager of the AmSouth Select Equity Fund. “That could buoy the market and help us take off.”
With third-quarter earnings season just starting, a number of large companies are preparing to issue results, including Costco Wholesale, Marriott International and Alcoa today, and General Electric on Friday.
“GE’s breadth and industrial base will tell a lot about the condition of the economy,” said Ned Riley, investment strategist at State Street Global Advisors. Investors also are anxious to see how GE describes its outlook for the fourth quarter and 2005, he said.
Alcoa rose 60 cents to $34.16 and GE advanced 33 cents to $34.38.
Among Wednesday’s market highlights:
* Treasury bond yields surged as lackluster interest in new five-year T-notes left investors skittish before the September job report. Traders were also taken aback when William Poole, president of the St. Louis Federal Reserve Bank, hinted at the possibility of steeper Fed rate hikes than the market had anticipated.
The yield on the benchmark 10-year T-note rose to 4.22% from 4.17% on Tuesday. The five-year notes were sold at a yield of 3.49% and drew bids for 2.32 times the amount offered, below September’s 2.72 level as well as the 2.59 average this year.
* Energy stocks gained with oil prices. Exxon Mobil climbed 71 cents to $50.03, ConocoPhillips added $2.15 to $88.85 and Occidental rose $1.35 to $58.49.
* Steel and mining stocks helped to lift the broader market. Nucor jumped $2.36 to $98.16, Phelps Dodge rose $3.37 to $95.39 and Inco gained $1.45 to $40.25.
* Gold neared a five-month high on expectations that a prolonged rally in crude oil prices will increase the allure of precious metals as a hedge against inflation. Gold rose 20 cents to $418.40 an ounce in New York trading, on the heels of Tuesday’s gain of $4.20.
* The S&P; small-cap 600 index jumped 0.9% to 301, closing at a record high for the third day in four. Netegrity helped lead the rally in smaller shares after Computer Associates agreed to buy the maker of security software for $430 million. Netegrity soared $2.79 to $10.54. Computer Associates gained 46 cents to $27.85.
* Chiron added 34 cents to $38.32 one day after plunging 16% on news that British regulators shuttered a Liverpool factory where the Emeryville, Calif., company makes flu vaccine. Chiron slashed its earnings forecast and its shares were downgraded by several brokerages.
* Merck resumed its decline, sinking $1.76 to $31.67, an eight-year low. The drug giant last week pulled its key arthritis drug off the market because of health complications.
