Stocks climb back as oil slides again
Wall Street struggled but ultimately closed mostly higher Thursday as sharply lower oil prices helped investors brush off concerns about sluggish consumer spending.
Crude oil futures, continuing a plunge that began Wednesday, tumbled $2.73 to $55.59 a barrel in New York trading, hitting their lowest level since June 2005.
Retailers’ lackluster holiday sales reports initially sent major stock indexes lower. But stocks climbed back after the drop in oil prices raised hopes that cheaper gasoline might be on the way.
A broad advance in chip stocks supported the market. Leading the way was Intel, which surged to its highest level in two weeks after Banc of America Securities said it expected the company’s fourth-quarter earnings to come in higher than anticipated.
The market’s performance showed that investors remained uneasy about any economic data, especially after minutes from the Federal Reserve’s last meeting, released Wednesday, indicated policymakers were concerned about increased risks to economic growth. Mixed data Thursday included disappointing housing and service-sector reports.
“People are thinking now that energy prices are coming down, and that gives a chance for technology and other sectors to perform better,” said Scott Fullman, investment strategist at Hapoalim Securities USA. “The broader picture is that the economy continues to show signs of slowing, and that will continue through the first quarter.”
The Dow Jones industrial average inched up 6.17 points to 12,480.69. The index had been down about 50 points early in the session.
Among broader indexes, the Standard & Poor’s 500 rose 1.74 points, or 0.1%, to 1,418.34, and the tech-dominated Nasdaq composite climbed 30.27 points, or 1.2%, to 2,453.43.
Bond yields sank, with the benchmark 10-year Treasury note falling to 4.6% from 4.66% on Wednesday. Yields have pulled back in recent days after rising sharply at the end of last year amid signs of strength in the economy.
Some bond buyers Thursday were encouraged by the Institute of Supply Management’s services sector index for December, which suggests that growth slowed from November.
Other data released Thursday included the Commerce Department’s report that U.S. factory orders bounced back during November from a big drop. However, the rebound was smaller than expected and driven partly by soaring military aircraft demand.
Meanwhile, the Labor Department said the number of laid-off workers filing unemployment claims reached its highest level since late November. The National Assn. of Realtors’ pending home sales index for November, a measure of future demand for homes, slipped 0.5% to 107, from a revised 107.5 in October.
Falling oil prices continued to be the biggest influence on the markets. The cost of crude slid for a second day after the government reported U.S. inventories of gasoline, heating oil and diesel fuel rose more than analysts expected during the last week of 2006.
Oil has slumped from $61.05 a barrel at year-end.
In other market highlights:
* Energy stocks fell along with crude prices for a second day. Exxon Mobil was among the biggest decliners on the Dow index, sinking $1.39 to $72.72. Chevron dropping 69 cents to $70.28.
* The prospect of lower gasoline prices was seen as a positive for retailers, many of which suffered during the holiday season, and some of which issued profit warnings Thursday.
Gap said fourth-quarter results would be below expectations, but its shares gained 13 cents to $19.44. Target, the nation’s second-largest discount retailer, advanced 41 cents to $57.59 despite missing sales estimates.
* Intel rose 82 cents to $21.17 after Banc of America Securities raised the company’s fourth-quarter earnings estimate, saying the chip maker will likely gain market share. Rival Advanced Micro Devices rose 27 cents to $19.79.
* Apple Computer gained $1.86 to $85.66 amid speculation that the maker of the iPod music player would soon make an announcement about its so-called iTV wireless video streaming device. Some expect Apple to announce the release of iTV at the MacWorld conference next week.
* Google increased $15.67 to $483.26 after it said it would team with China Mobile, the world’s biggest cellphone operator by customers, to offer a mobile-phone search service to attract more users.
* Biotechnology company Amgen of Thousand Oaks climbed $2.93 to $71.33 after Bear Stearns raised its rating to “outperform” from “peer perform,” saying Amgen has the potential to gain almost a third from Wednesday’s price of $68.40.
Genzyme jumped $3.45 to $65.60 on an upbeat analyst’s report.
