Stocks Get a Lift on Oil, Profit News
Tumbling oil prices and strong earnings from home improvement retailer Lowe’s helped send stocks higher Monday as investors regained optimism about the economy and corporate profits.
A number of broad market indexes, including the New York Stock Exchange composite and the Russell 2,000 small-stock index, ended at all-time highs.
Oil prices slumped after surging to nearly $63 a barrel Friday in response to a foiled attack against a Saudi Arabian processing facility. A barrel of light crude settled Monday at $61, down $1.91, in New York trading.
Stocks moved higher at the opening bell and then held on to most of their gains.
The Dow Jones industrial average rose 35.70 points, or 0.3%, to 11,097.55.
Among broader indexes, the Standard & Poor’s 500 added 4.69 points, or 0.4%, to 1,294.12, just 0.06 point shy of its 4 1/2 -year high set Jan. 11. The Nasdaq composite gained 20.14 points, or 0.9%, to 2,307.18.
The Russell 2,000 rallied 4.03 points, or 0.5%, to 740.63, its second consecutive new high. Other indexes hitting record highs included S&P;’s gauges of smaller stocks and mid-size stocks, and the Dow transportation index.
Advancing issues outnumbered decliners by about 9 to 7 on the NYSE.
Analysts said the strength in the broader market was a good sign, suggesting that investors were finding appealing stocks in many industry sectors.
“I think this is one of those times where it’s hard to be bearish,” said Chris Johnson, manager of quantitative analysis at Schaeffer’s Investment Research in Cincinnati. “We’re still in a market that can easily fall prey to all kinds of intraday activity, up or down, but I think we have room to go higher over the next two to three weeks.”
Better-than-expected fourth-quarter results and a bullish forecast from Lowe’s allayed investors’ concerns about consumer spending.
But the data were troubling for the bond market because of fears that the Federal Reserve might continue to tighten credit. Treasury yields edged higher.
Bond yields also were pushed up as some traders pared their holdings in anticipation of a flood of new mortgage-backed and corporate bonds.
Issuers on Monday sold about $3 billion of bonds backed by loans on properties including office towers and shopping malls, said Brian Schwartz, a commercial-mortgage bond trader at RBS Greenwich Capital. Companies including UnitedHealth Group and Comcast announced more than $8 billion of debt sales.
“We are getting hit with an enormous amount of supply,” said David Ader, an interest rate strategist at RBS Greenwich. “That is having an exaggerated influence.”
The yield on the 10-year Treasury note rose to 4.59% from 4.57% on Friday.
Wall Street’s bullishness was undiminished by a disappointing report on the housing market from the Commerce Department. New-home sales dropped 5% in January to 1.23 million units. Economists had expected sales of 1.27 million for the month.
Housing stocks were weaker on the news, with Toll Bros. falling 69 cents to $32.65 and D.R. Horton dropping 87 cents to $35.23.
The housing report was the first in a batch of economic data due this week, including reports on fourth-quarter gross domestic product, February retail sales and February industrial activity.
“This really is an impressively durable market, but there’s so much more [news] to come later in the week,” said Hans Olsen, chief investment officer at Bingham Legg Advisers.
Among the day’s market highlights:
* Lowe’s jumped $3.78, or 5.8%, to $69.30 after reporting earnings that beat Wall Street profit forecasts by 7 cents a share. The company also issued a strong outlook for earnings that came in well above analysts’ forecasts.
Larger rival Home Depot rallied 82 cents to $42.45. An index of retail companies rallied 1.9% for the best performance among two dozen S&P; 500 industry groups. Target rose $1.43 to $55.48.
* In the tech sector, SanDisk surged $4.74 to $61.08 after the maker of flash-memory cards was upgraded to “buy” from “hold” by a Citigroup analyst.
* Energy companies weighed on the S&P; 500, losing 1.4% for the worst performance among 10 groups. Schlumberger, the biggest oil-field services company by market value, fell $2.76 to $115.38. National Oilwell Varco, which makes oil-field equipment, declined $2.68 to $61.11.
* Avon Products climbed 70 cents to $28.99 after it was awarded China’s first license for direct selling as the government lifted a seven-year ban on the practice.
* Walt Disney was up 40 cents to $28.38 after a report in Barron’s suggested that the entertainment conglomerate could be purchased by Apple Computer now that Apple co-founder Steve Jobs sits on Disney’s board as its largest individual shareholder. Apple fell 47 cents to $70.99.
* Merrill Lynch rose $1.12 to $77.88, a five-year high, after the Wall Street firm said it would enlarge its share repurchase program by $6 billion.
