Stocks Finish Higher as Oil Prices Tumble
Stocks ended mostly higher Wednesday after oil fell by more than $1 a barrel and Boeing said its earnings had more than doubled.
A late-afternoon tumble in oil prices sent stocks higher in the final hour of trading. Oil futures fell $1.36 a barrel to $66.56 in New York trading.
Stocks had stayed in a tight range most of the day after Google’s fourth-quarter earnings missed analysts’ estimates Tuesday, the first time the company hasn’t pleasantly surprised investors since its August 2004 initial public offering of stock.
Google closed down $30.88, or 7.1%, at $401.78 on Wednesday, losing more than $9 billion in market capitalization.
Analysts were reassured by the fact that the overall market, which traded in a tight range during January, wasn’t overwhelmed by Google’s results.
“The fact that the market is continuing to stay at the upper end of the trading range, even with oil prices continuing to hover around their highs, is positive; it indicates investor confidence,” said Peter Cardillo, chief strategist and senior vice president at S.W. Bach & Co.
The Dow Jones industrial average rose 89.09 points, or 0.8%, to 10,953.95.
Broader indexes were also higher. The Standard & Poor’s 500 index rose 2.38 points, or 0.2%, to 1,282.46, and the Nasdaq composite index rose 4.74 points, or 0.2%, to 2,310.56.
Yields on U.S. Treasuries rose as the government said it would auction $48 billion in three- and 10-year notes and 30-year bonds next week, adding to a record quarter of borrowing for the Treasury. The yield on the benchmark 10-year note rose to a two-month high of 4.56% from 4.52% on Tuesday.
The new 30-year bond yielded about 4.6% in pre-auction trading, according to traders at Lehman Bros. The U.S. will sell $14 billion in 30-year bonds next week, marking the return of a security that for more than a quarter-century served as the world’s safest long-term investment.
The so-called long bond was last offered in 2001.
On Wall Street, Google’s tumble continued a trend the market has seen in recent weeks: Stocks that disappoint fall hard.
“There’s ‘hot money’ -- hedge fund money, more aggressive money -- if they sense anything out of the ordinary, they bail out quickly, en masse,” said Ralph Acampora, managing director of technical research at Knight Capital Group, an asset management firm.
The market may look placid, he said, but “the point is that there’s selling under the surface, there’s some profit taking and some of it is nasty.”
In economic news, the Institute for Supply Management said manufacturing grew in January at a slower pace than in December. The group said that deliveries of goods were slowing and that prices were increasing.
Some investors are rooting for a cooling economy, which would give the Fed a firm reason to end its streak of short-term interest rate hikes. They fear that continued rate hikes could push the economy into a recession.
In other market highlights:
* Boeing rose $3.31 to $71.62 after it said fourth-quarter profit more than doubled as the huge aerospace company’s resurgent commercial airplane division posted strong gains, helping lift the Dow. The company raised its profit outlook for 2006, citing better operating performance.
* Shares of Tribune, one of the nation’s largest owners of newspapers and TV stations, hit its lowest closing price since 1998 after it said fourth-quarter profit fell 38% on a spate of charges related to workforce cuts and the shutdown of a production plant. Shares of Tribune, which owns the Los Angeles Times, fell 30 cents to $28.71.
* Results from Google weighed on other computer-related shares. Amazon.com, the world’s largest Internet retailer, fell 84 cents to $43.98.
* Research in Motion, which makes the BlackBerry wireless e-mail device, rose $6.08 to $73.61 after the U.S. Patent and Trademark Office sided with the company by issuing a non-final rejection of a fifth patent at the center of its legal battle with patent holding company NTP. Later Wednesday, the Justice Department urged a judge to refrain from plans to shut down BlackBerry service until the government received more assurances its users would be exempted.
* JetBlue Airways fell $1.86 to $11.18 after it said its fourth-quarter loss widened as increased revenue could not offset the effect of sharply higher fuel costs. The airline also forecast losses for the first quarter and full year 2006.
* Energy-related stocks declined with oil prices after an Energy Department report showed larger-than-expected gains in U.S. oil and gasoline stockpiles. Valero Energy, the largest U.S. refiner, dropped $2.79 to $59.64. Exxon Mobil lost 80 cents to $61.95. A measure of energy stocks fell 1.9% for the worst performance among the 10 groups in the S&P; 500.
* Thomas Weisel Partners Group, a San Francisco-based investment bank, will begin trading on Nasdaq today under the ticker symbol TWPG. Shares in Weisel’s initial public offering were priced late Wednesday at $15 each. Weisel sold 6 million shares, raising $70 million, on higher-than-expected demand.
