Upbeat Fuel Data Spur Late Stock Rally
A late surge in buying sent stocks sharply higher Thursday as an upbeat government oil inventory report helped investors look past rising oil prices and mediocre economic data.
There were reasons for optimism in the Energy Department’s weekly inventory report, which showed strong reserves in gasoline, heating oil and other distillates. The report served to slow, but not stop, this week’s jump in oil prices. A barrel of light crude closed at $51.39, up 22 cents, in New York trading.
Combined with economic data showing a slight rise in unemployment claims and a drop-off in orders for big-ticket items, the fact that the markets did not slide further earlier in the session boosted investors’ confidence.
“I think you’re seeing a lot of institutional money that was put to work this afternoon,” said Chris Johnson, manager of quantitative analysis at Schaeffer’s Investment Research in Cincinnati. “Stocks traded pretty narrowly most of the day but didn’t give ground, and we’re seeing a bounce off that.”
The Dow Jones industrial average rose 75 points, or 0.7%, to 10,748.79.
Broader stock indicators also gained ground. The Standard & Poor’s 500 index was up 9.40 points, or 0.8%, at 1,200.20, and the Nasdaq composite index gained 20.45 points, or 1%, to 2,051.70.
Advancing issues outnumbered decliners by about 9 to 5 on the New York Stock Exchange.
Wall Street was unimpressed with the government’s latest economic data, which contributed to the market’s early uncertainty. The Commerce Department said orders for durable goods -- items built to last at least three years -- fell 0.9% in January, the worst showing in three months.
Excluding transportation equipment, however, orders for durable goods rose 0.8% last month, higher than the 0.3% median estimate of economists surveyed by Bloomberg News and lifting shares of some companies including Caterpillar.
The Labor Department also reported a larger-than-expected increase in first-time unemployment claims.
The middling economic figures failed to lift the dollar, which fell against the euro and was mixed against other currencies. Gold rose modestly, while bonds slipped following the oil inventory report, with the yield on the 10-year Treasury bond rising to 4.29%, from 4.26% on Wednesday.
With those factors in mind, the stock market’s late move higher may not be a sign of a strong rally, analysts said, especially with the dollar still low and oil prices above $50 a barrel -- conditions that have spurred fears of inflation on Wall Street.
“What does the inflation picture look like? That’s the big question, and it still hasn’t been answered in a real way,” said Will Gourd, global investment specialist at J.P. Morgan Private Bank. “I think the market could be kind of cranky here.”
In other market highlights:
* The energy sector had the biggest advance among the S&P; 500’s 10 industry groups, rising 2.2%.
Exxon Mobil, which reported a record fourth-quarter profit, gained $1.71 to $61.13. ConocoPhillips, whose net income also climbed to an all-time high, added $2.98 to $110.18. Its shares are up 27.5% this year.
* Caterpillar jumped $2.70 to $93.16, its biggest one-day gain since Sept. 29. Boeing climbed $1.22 to $53.94 after Ryanair Holdings ordered 70 Boeing 737 planes valued at more than $4 billion.
* Google and Yahoo fell after an analyst downgraded the Internet search engines and as Time Warner’s America Online started a competing Web search function to tap the advertising market that the two companies dominate.
Google lost $5.06 to $188.89. Yahoo retreated 64 cents to $31.48. Time Warner fell 34 cents to $17.38.
* Advanced Micro Devices rallied $1.02 to $17.62 as some analysts said the company, Intel’s largest competitor in the market for personal computer microprocessors, might spin off its money-losing flash memory chip division, called Spansion. The stock’s 6.1% surge was its largest since Dec. 6.
The SOX semiconductor index climbed 2.4%; all of its 19 component stocks gained. Intel added 39 cents to $23.70.
