Drop in Oil Prices Boosts Stocks
A sharp drop in oil prices gave Wall Street a modest relief rally Monday, with stocks edging higher on news that oil production had soared during the month of September.
The latest report from the Organization of the Petroleum Exporting Countries showed crude production last month at 25-year highs, pushing oil down $1.26 to $53.67 a barrel in New York futures trading. The drop helped pull more money back into the stock market.
The Dow Jones industrial average added 22.94 points, or 0.2%, to 9,956.32.
Broader indexes were stronger. The technology-dominated Nasdaq composite gained 25.02 points, or 1.3%, to 1,936.52, while the Standard & Poor’s 500 rose 5.82 points, or 0.5%, to 1,114.02.
Winners outnumbered losers by about 3 to 2 on Nasdaq and by a narrower margin on the New York Stock Exchange.
Oil’s slide gave investors “a little more confidence in equities in an otherwise quiet afternoon,” said Brian Williamson, an equity trader at Boston Co. Asset Management. “I do think there could be some wait-and-see on earnings, since we have so many of them coming this week.”
About 30% of the S&P; 500 companies are scheduled to report earnings this week.
The good news about oil helped investors overcome 3M’s earnings, which missed Wall Street’s expectations. The diversified manufacturer said earnings rose 17% in the quarter to 97 cents a share, a penny shy of analysts’ average estimate.
The company, one of the Dow-30 stocks, also projected fourth-quarter profit slightly below analysts’ estimates, and said it remained “cautious” on the global economy. 3M stock fell as low as $73.31, then rallied to end at $76.10, off $1.88.
In other trading, bond yields were little changed.
The euro rose to a seven-month high of $1.25 from $1.248 on Friday after a Treasury Department report showed foreign investors bought a net $59 billion of Treasuries, stocks, corporate bonds and other U.S. securities in August, down from $64 billion in July and the slowest pace since Oct. 2003.
The drop in demand may boost concern that a near-record U.S. trade deficit will erode support for the dollar, analysts said.
In other market highlights:
* Many tech stocks rose as investors awaited earnings from IBM, which reported results after the session. IBM beat Wall Street estimates by 3 cents a share before a one-time charge and also raised its full-year forecast. Its stock, up $1.07 to $85.92 in regular trading, jumped to $87.90 in after-hours activity.
In regular trading, Apple Computer rose $2.25 to $47.75, Adobe Systems rallied $1.59 to $53.07, InfoSpace gained $2.01 to $48.71 and Google soared $5.05 to a record $149.16.
* Marsh & McLennan, the world’s largest insurance broker, continued to slide, losing $3.63 to a 52-week low of $25.57. The stock plunged 37% last week after New York Atty. Gen. Eliot Spitzer accused it of conspiring with insurance companies to rig bids for the big employers that are its clients. Marsh was hit by a shareholder suit Monday.
American International Group, which was named but not charged in Spitzer’s complaint, rose $1.83 to $59.68. The stock tumbled 14% last week but was boosted Monday after some analysts said the retreat represented a buying opportunity.
* Dow component Pfizer gained 50 cents to $29 after the pharmaceutical giant said it would conduct additional studies on its Celebrex arthritis drug and potential cardiovascular risks. Merck pulled its rival Vioxx drug from the market last month because of an increased risk of stroke and heart attack. Merck rose 40 cents to $30.90.
* Amid the continuing flu vaccine shortage, MedImmune gained $1.81 to $28.13. The company makes the FluMist nasal spray influenza vaccine. Vaccine maker Chiron gained 3 cents to $32.80. Chiron shares plunged this month after British regulators shut down its vaccine plant, triggering the shortage.
* Apollo Group advanced $3.11 to $71.32. Morgan Stanley initiated coverage of the biggest commercial education company with an “overweight” rating. Analyst Christopher Gutek cited the company’s strong competitive position and prospects for profit-margin expansion.
* Cogent, a South Pasadena-based fingerprint-identification technology company that went public last month at $12 a share, jumped $1.53 to a new high of $21.49.
