Stocks rebound as crude oil prices slide
The stock market rebounded in light post-holiday trading Tuesday as lower oil prices encouraged investors to add to their portfolios in the final days of the year.
The major indexes advanced after recording three straight down sessions last week. Volume, however, was low Tuesday, reflecting an absence of major economic reports as well as the usual lack of people wanting to trade the day after Christmas.
Oil’s slide lent support to stocks as investors brushed off concerns about Iran’s reaction to United Nations sanctions over its nuclear program.
The near-term crude oil futures contract fell $1.31 to $61.10 a barrel on the New York Mercantile Exchange. That raised the prospect of lower gasoline prices, which could prop up consumer spending.
That was welcome news for retailers after reports showed holiday shopping might have been weaker than expected despite a late surge of buying in the final days before Christmas.
Share trading volume is expected to remain light this week as many investors are on vacation, which can skew price moves and make them appear more dramatic.
European stock markets remained closed Tuesday for extended Christmas holidays, while stock prices in Tokyo hit a seven-month high.
“We’re seeing lower oil prices being a minor catalyst for the market,” said Joe Ranieri, managing director of equity trading for Canaccord Adams. “Other than that, you’re just seeing a quiet week with added volatility.”
The Dow Jones industrial average rose 64.41 points, or 0.5%, to 12,407.63.
Broader stock indicators were also higher. The Standard & Poor’s 500 index was up 6.14 points, or 0.4%, at 1,416.90, and the Nasdaq composite index was up 12.33 points, or 0.5%, at 2,413.51.
The advances helped boost the likelihood that all three indexes would finish the year with double-digit gains. The Dow is up 15.8% so far in 2006, the S&P; has climbed 13.5%, and the Nasdaq is up 9.4%.
The Russell 2,000 index of smaller companies was up 7.35 points Tuesday, or 0.9%, at 788.17.
Bond yields slipped, with the 10-year U.S. Treasury note falling to 4.6%, from 4.62%, as the indications of lower-than-expected holiday sales amplified concerns about the economy’s strength.
In other market highlights:
* Banks and other financial companies in the S&P; 500 gained 0.7%, second-best among 10 industry groups, reflecting the prospect of lower interest rates. Lower rates boost the value of bonds owned by banks, brokers and insurers, and also can increase demand for mortgages and other loans.
Citigroup climbed 57 cents, or 1%, to $55.12. Bank of America rose 35 cents to $53.70. Wells Fargo picked up 10 cents to $35.94.
Utility stocks, which are also rate-sensitive because their relatively high dividends compete with bond yields, had the fourth-steepest gain in the 500-stock benchmark. Dominion Resources, the biggest U.S. utility by sales, gained 63 cents to $82.99.
* The Amex Airline Index surged 2.3% as the price of crude, a sign of jet-fuel costs, marked its biggest decline in New York since Nov. 16. UAL, parent of United Airlines, advanced $1.18 to $44. Southwest Airlines rose 2 cents to $15.29.
* Helping to lead the Dow higher was Exxon Mobil, which was awarded a contract by Libya’s state-run National Oil. Exxon Mobil rose 64 cents to $76.05.
Chevron increased 36 cents to $73.09, while ConocoPhillips was up 64 cents at $71.69.
Independent oil and natural-gas producer Anadarko Petroleum said it planned to sell two gas fields in Louisiana to EXCO Resources for $1.6 billion. Anadarko is selling assets to cut its debt after spending $22.5 billion this year to buy rivals Kerr-McGee Corp. and Western Gas Resources.
Anadarko rose 56 cents to $42.70.
* Gold futures added $4.60, to close at $623.70, and gold stocks rose along with the metal. Barrick Gold moved up 21 cents to $30.11, and Crystallex International climbed 14 cents, or 3.9%, to $3.78.
Shares of miner Freeport-McMoRan Copper & Gold also rose, gaining 70 cents to $54.54.
* Shares of retail chains were mixed. Wall Street will now be looking to see how retailers fare in post-holiday sales that could boost business for December and the fourth quarter.
Wal-Mart Stores rose 57 cents to $46.11 after being down most of the session. Rival Target fell 23 cents to $57.09, and electronics chain Best Buy shed 70 cents to $49.23.
* Microsoft rose 35 cents to $29.99 despite a report from computer security experts that the company’s newly released operating system, Windows Vista, contains potentially serious flaws.
* Shares of Goodyear Tire & Rubber gained 40 cents to $20.12 after it reached a tentative deal with the United Steelworkers union to resolve an 11-week dispute over healthcare and plans to close a factory in Texas.
* Telik shares plunged $11.49, or 71%, to $4.77 after the drug company said a late-stage trial of its cancer treatment Telcyta were “extremely disappointing.”
* E-Trade Financial rose 2 cents to $22.63 in its last day of trading on the New York Stock Exchange. Starting today, the discount brokerage will again be listed on Nasdaq, under the stock ticker ETFC.