Shares Climb as Oil Slides
Stocks gained modestly Monday, helped by a pickup in technology shares and a slide in crude oil prices.
Wall Street crept forward as oil prices wilted from last week’s record highs, settling at $66.27 a barrel, down 59 cents, on the New York Mercantile Exchange.
Technology was one of the stock market’s strongest sectors on the day. Agilent Technologies surged $3.92 to $30.33 after it said it would sell its chip unit to two buyout firms for $2.66 billion. Apple Computer, Broadcom and Qualcomm also boosted the sector.
Volume was light. After the market seesawed last week to a small net gain, the August doldrums descended Monday on Wall Street. With earnings season winding down and no dramatic economic releases for the day, traders had little to motivate them.
“As long as the price of oil remains above $65 a barrel, investors are going to be very guarded and volume, low,” said Hugh Johnson, chief investment officer of Johnson Illington Advisors. “The other potentially exciting event is housing prices.... Sales of new homes will be watched very carefully for any signal that the housing bubble is breaking.”
The Dow Jones industrial average rose 34.07 points, or 0.3%, to 10,634.38. The index had slumped 85.58 points on Friday as oil hit a record high, but the Dow still gained 0.4% for the week.
Broader stock indicators also advanced Monday. The Standard & Poor’s 500 rose 3.48 points, or 0.3%, to 1,233.87, and the Nasdaq composite rose 10.14 points, or 0.5%, to 2,167.04.
Winners topped losers by about 3 to 2 on the New York Stock Exchange and on Nasdaq.
Fundamentally, the market is still on solid footing, “but of course, somewhere along the line, crude prices at these levels will weigh on economic activity if they don’t come down within a reasonable time,” said Peter Cardillo, chief strategist at S.W. Bach & Co.
Stocks also were helped by a New York Federal Reserve report on manufacturing activity in that state. The Fed’s factory index fell less than expected, to 23 from July’s reading of 23.9. The reading exceeded economists’ median estimate of 18.5 in a Bloomberg News survey. Manufacturing is expanding when the index is above zero.
The strength in the index surprised the Treasury bond market, helping send yields higher. The 10-year T-note rose to 4.29% from 4.24% on Friday.
In other market highlights:
* Apple rallied $1.58 to $47.68 after Piper Jaffray analyst Gene Munster named the maker of Macintosh personal computers and iPod music players the firm’s “large-cap top pick” for the rest of 2005. Munster predicts Apple’s share price may climb to the mid-$50s by year’s end as results for the September quarter surpass analysts’ expectations.
Macintosh PCs have gained, on average, 0.2% of the global market per quarter over the last year, Munster said, putting Apple on pace to exceed Wall Street estimates.
* Among other tech issues, Broadcom rose $1.05 to $42.85 and Qualcomm climbed 67 cents to $41.46.
Intel added 22 cents to $26.53 after a German newspaper reported that the chip maker planned to expand its flash-memory business and challenge rival Advanced Micro Devices. AMD gained 15 cents to $20.85.
* Lowe’s, the world’s second-largest home-improvement retailer, added 70 cents to $65.89. Second-quarter earnings of $1.05 a share surpassed the $1.02 predicted by analysts surveyed by Thomson Financial because of demand for air conditioners, riding lawn mowers and kitchen installations. Lowe’s increased its full-year forecast to a range of $3.31 to $3.37 from $3.25 to $3.34.
Bigger rival Home Depot rose 33 cents to $41.61. The company today will probably report higher second-quarter net income after it sold more gas grills, patio furniture and appliances.
* Procter & Gamble advanced 63 cents to $54.18. The company said regulators approved combining its Actonel drug in a packet with calcium supplements to fight osteoporosis, a bone-thinning disease. Actonel would be the first treatment for osteoporosis to be prescribed with calcium.
* Energy shares dropped with oil. ConocoPhillips, the largest U.S. oil refiner, fell 78 cents to $65.84. Schlumberger, an oilfield-services company, retreated 85 cents to $85.17. Chevron declined 15 cents to $62.13 and Occidental Petroleum fell $1.11 to $82.57.
* Real estate investment trust shares continued to rebound after profit taking clipped nearly 9% off the average stock in the four sessions through Aug. 8.
A Bloomberg News index of 147 REITs has climbed for five straight sessions. Among the gainers Monday were Vornado Realty, up 52 cents to $85.42; Public Storage, up 73 cents to $63.03; and Sun Communities, up 84 cents to $33.88.
* On the downside, shares of some mortgage lenders ended lower on continued worries about loan quality. Downey Savings dropped $2.90 to $64.17 and Countrywide Financial lost 24 cents to $34.82.
* Delta Air Lines sank 22 cents to $1.39 on fears that it may file for bankruptcy protection. After the market closed, Delta said it would sell its Atlantic Southeast commuter unit to SkyWest. The news drove Delta shares to $1.78 in after-hours trading.
* British Airways rose 44 cents to $53.11 after it resumed all scheduled flights and said fewer than 200 passengers remained stranded after last week’s ground-crew walkout disrupted the travel plans of about 100,000 fliers.
