Stocks Rise on Oil Price Drop
Stocks rose Monday after oil prices settled below $60 a barrel, easing concerns about the effect of high fuel costs on consumers and prompting investors to shift money out of energy shares and into the undervalued technology and financial sectors.
Technology bellwether Intel and Citigroup, the world’s largest financial services company, were among the biggest positive influences on the blue-chip Dow average.
Unusually warm weather quelled fears of a winter heating-oil shortage, and a barrel of light crude lost $1.11 to settle at $59.47 in New York trading.
“Energy stocks have been the year’s winners, but the weather’s been gorgeous and there were a lot of overblown fears with the hurricanes,” said Kevin Kruszenski of McDonald Investments Inc. in Cleveland, referring to warm temperatures in much of the country. “So sectors that have been out of favor, mainly technology and the financials, are now providing some leadership -- the banks, in particular.”
The Dow Jones industrial average gained 55.47 points, or 0.5%, to 10,586.23, its highest close since Sept. 16.
Broader stock indicators were also higher. The Standard & Poor’s 500 index was up 2.67 points, or 0.2%, at 1,222.81, and the Nasdaq composite index advanced 8.81 points, or 0.4%, to 2,178.24.
Advancing issues led decliners by about 9 to 4 on the New York Stock Exchange.
Bond yields slipped, with the benchmark 10-year U.S. Treasury note falling to 4.62%, from 4.66% on Friday. Yields are still near their highest level for the year, however, leading to speculation that investors will be snapping up bonds as the government sells $44 billion of debt this week.
The Treasury, which concentrates its debt sales in four quarterly auctions, will sell $18 billion of three-year securities today, $13 billion of five-year notes Wednesday and $13 billion of 10-year notes Thursday.
The three-year securities to be sold today yielded 4.52% in pre-auction trading, suggesting they will be sold at the highest yield since May 1998. After that auction, the Treasury suspended three-year note sales. They were resumed in May 2003.
Monday’s stock trading session follows two straight weeks of sturdy gains as investors sifted through quarterly profit reports and mostly positive economic numbers for any indication of the market’s direction. Last week, the major indexes each added more than 1%.
“Over the last six months, the market has been through trials and tribulations,” said Bill Groenveld, head trader for VFinance Investments. “But it’s really coming through with flying colors considering everything it’s been up against.”
But even as energy prices continue descending from record levels set in early September, that alone is not enough to boost stocks after the recent rallies, said Arthur Hogan, chief market analyst for Jefferies & Co.
“The three things we’ll digest this week are earnings and guidance for the fourth quarter, and the long-term forecast for energy prices,” Hogan said, adding that investors will also be watching how companies use stockpiles of cash they have built up.
In other market highlights:
* Among technology shares, Intel rose 51 cents, or 2.1%, to $24.50 and National Semiconductor added 46 cents to $23.46. Microsoft gained 35 cents to $27.01, and Google rose $4.60 to $395.03, a new high.
* Citigroup’s stock climbed 83 cents to $46.43 and was the top contributor to the S&P; 500’s gain. Other banks had sharp gains, with Wachovia advancing 62 cents to $51.33 and Wells Fargo gaining 57 cents to $60.29.
* An index of retailers gained for a fourth day, finishing up 0.7%. Gap, the largest U.S. clothing chain, jumped 81 cents to $18.08. The company is scheduled to report third-quarter results Nov. 17. Lowe’s, the world’s No. 2 home-improvement retailer, climbed $1 to $61.95.
* An index of energy shares slumped 1.6%, paring its advance for the year to 27%. Exxon Mobil lost 80 cents to $57.10 and Chevron fell 61 cents to $57.40. Williams, the biggest U.S. transporter of natural gas, declined $1.01 to $20.86.
* Guidant fell $1.40 to $57.52, while Johnson & Johnson rose 55 cents to $61.43. Guidant sued J&J; to complete the $25.4-billion purchase of Guidant after J&J; missed the Nov. 4 deadline for closing the transaction. Guidant, the heart-device maker facing U.S. probes and New York state fraud claims, is seeking an order for J&J; to consummate the transaction.
