Stocks Advance, Bond Yields Rise as Oil Tumbles
Stocks moved higher Wednesday on plunging oil prices and an upbeat outlook from Hewlett-Packard.
But inflation concerns capped the day’s rise, as government data showed wholesale prices for July increased by the largest amount in nine months thanks to higher gas prices.
The Dow Jones industrial average rose 37.26 points, or 0.4%, to 10,550.71.
Broader stock indicators also rose. The Standard & Poor’s 500 index rose 0.90 of a point, or 0.1%, to 1,220.24, and the Nasdaq composite index rose 8.09 points, or 0.4%, to 2,145.15.
Treasury yields shot up on the sharp decline in energy prices and on the Labor Department’s producer price index report, which measures price pressures before they reach the consumer. The index jumped 1% in July, the biggest advance since a 1.5% increase in October.
Bonds’ yields rise as their prices fall. The recent strength in bond prices has been tied partly to worries that record high crude oil and gasoline prices would undermine consumer confidence and drag down economic growth over the next few quarters.
Those fears took a back seat Wednesday as crude oil futures tumbled. Dealers also said the surprisingly large jump in July producer prices would harden the Federal Reserve’s resolve to stay vigilant on inflation with more rate increases. The yield on the benchmark 10-year Treasury note rose to 4.27%, from 4.21% on Wednesday.
Among stock traders, the slide in oil prices helped investors look past inflation fears. A barrel of light crude settled at $63.25, down $2.83, or 4.3%, on the New York Mercantile Exchange.
In other market highlights:
* HP rose $3.12 to $26.82 after its fiscal third-quarter results beat Wall Street expectations, though a one-time tax adjustment led to a sharp decrease in the computer maker’s earnings.
In the first full quarter under Chief Executive Mark Hurd, the company recorded higher sales in all its major businesses -- computers, printers and services. The company, which reported its results after the close of regular trading Tuesday, predicted the momentum would continue in the current quarter as a corporate restructuring proceeds.
* Applied Materials added $1.05, or 6.1%, to $18.22. Profit last quarter excluding a tax credit was 15 cents a share, beating the average estimate of analysts by 1 cent. Orders will rise as much as 10% this quarter from the prior three months, the company said, marking the first gain in a year.
* Exxon Mobil slid 89 cents to $58.18 for the worst performance in the Dow average. Valero Energy, the No. 3 U.S. oil refiner, retreated $4.21 to $86.52.
* Nordstrom jumped $3.18, or 10%, to $34.30, after the upscale department-store chain raised its full-year profit forecast to $1.80 to $1.90 a share from a prediction of as much as $1.75.
* Blue Coat Systems surged $7.65, or 25%, to $37.89. The maker of software to thwart computer viruses and filter Internet traffic said it expected fiscal second-quarter profit, excluding some items, of 25 cents to 30 cents a share, topping Wall Street’s estimate of 22 cents reported by Thomson Financial.
* Boeing added 75 cents to $67.02 after United Parcel Service said it ordered eight Boeing 747-400 aircraft in a deal whose value could reach $1.9 billion.
* Visteon, the No. 2 U.S. auto-parts maker, climbed 35 cents to $10.29. The company should post a “significant” earnings gain in 2007, Prudential Equity Group analyst Michael Bruynesteyn wrote to clients. He boosted his rating on Visteon to “overweight” from “neutral weight.”
* Abercrombie & Fitch slumped $2.38 to $58.85. The clothing retailer said it had a second-quarter profit of 63 cents a share. Analysts had forecast 69 cents.