Energy leads broad stock advance
Stocks rallied Tuesday even as oil hit record highs and the dollar sank to new lows.
The Dow Jones industrials gained 117.54 points, or 0.9%, to 13,660.94, continuing the seesaw pattern of the last week -- a decline one day, a rally the next.
Energy stocks led the advance, but all of the 10 major industry sectors in the Standard & Poor’s 500 index were positive for the session.
With a relative dearth of bad news from the battered financial sector, some investors felt more comfortable moving into the market, traders said.
Cisco Systems gained $1 to $34.08, its highest price since 2001. The world’s biggest maker of computer-networking equipment today may report a “solid quarter” for profit and revenue growth, RBC Capital Markets analyst Mark Sue wrote in a research note.
The S&P; 500 rose 18.10 points, or 1.2%, to 1,520.27 as winners topped losers by about 2 to 1 on the New York Stock Exchange.
The technology-heavy Nasdaq composite rallied 30 points, or 1.1%, to 2,825.18.
In commodity trading, near-term oil futures jumped $2.72 to a record $96.70 a barrel.
Although the continuing surge in oil prices is raising worries about the effect on the global economy, it also is underpinning the stock market by boosting energy-related shares.
On Tuesday, Exxon Mobil rose $2.72 to $90.38, Valero Energy soared $3.31 to $72.73 and PetroChina rocketed $7.32 to $229.42.
Other commodity-related shares also gained. Potash jumped $2.48 to $121.80, mining firm Rio Tinto surged $16.54 to $368 and Southern Copper rallied $7.76 to $130.91.
And gold- and silver-mining stocks rose as precious-metals prices continued their recent advance to the highest levels in more than 25 years. Agnico Eagle jumped $1.82 to $58.01. Coeur D’Alene added 52 cents to $4.36.
“Materials are feeding the global [economic] boom,” said Michael Williams, who helps oversee $2.8 billion at Genesis Partners in New York.
In other trading, Treasury bond yields were little changed. The 10-year T-note ended at 4.37%, up from 4.34% on Monday.
The dollar continued its descent, as the widening fallout of the U.S. home loan crisis reinforced expectations of another Federal Reserve interest rate cut in December. Lower rates could make dollar-denominated debt less attractive to foreign investors, reducing already weak demand for dollars.
The euro rose to a record $1.455 in New York, up from $1.447 on Monday. It was the ninth time in 11 days the euro advanced.
“I don’t think the dollar will strengthen any time soon” against the euro, UBS currency strategist Sophia Hardy said. “There is no foreseeable catalyst to push the dollar up.”
The U.S. currency was worth just 92.3 Canadian cents, down from 93.3 cents on Monday.
The Australian dollar hit a 23-year high early today after that country’s central bank raised its key short-term interest rate from 6.5% to 6.75%, citing a robust economy.
Among the day’s market highlights:
* Many financial stocks rebounded after being hammered in recent weeks as major banks and brokerages disclosed huge losses on mortgage-related securities. JP Morgan Chase rose $1.34 to $44.11, Goldman Sachs added $4.77 to $223.16 and Downey Financial was up 61 cents to $35.06.
But Citigroup continued to slide, dropping 82 cents to $35.08. The bank said it provided $7.6 billion of emergency financing to the seven so-called structured investment vehicles it manages after they were unable to repay maturing debt.
Morgan Stanley fell $1.08 to $54.51 on rumors that it will face large debt write-downs.
* Ambac Financial, the world’s second-largest bond insurer, led other debt insurers higher after it rebutted comments by Morgan Stanley analyst Ken Zerbe last week that the company faced a “downward spiral” and may go out of business. Ambac soared $3.39 to $27.99.
* In the tech sector Research in Motion, maker of the BlackBerry e-mail phone, added $3.07 to $131.04. Credit Suisse upgraded the company to “outperform” and said the shares might reach $160 in the next 12 months.
But Sun Microsystems slid 55 cents, or nearly 10%, to $5.16 after it reported a weaker-than-expected rise in quarterly sales.
* Archer Daniels Midland climbed $2.37 to $36.89. The world’s largest grain processor said first-quarter profit rose 9.4% as increased sales of wheat, corn and soybeans more than made up for declines in ethanol prices.
* Pasadena-based Jacobs Engineering soared $4.37 to a record $88.35 after its upbeat quarterly earnings report.
