Financials boost stocks as oil falls

From Times Wire Services

Stocks rallied Tuesday as the price of oil tumbled again and a positive report from an influential banking analyst sent shares of financial companies up sharply. The Dow Jones industrial average rose more than 130 points.

Share prices initially fell on disappointing earnings from American Express and Wachovia. But those declines were erased as crude futures sank more than $3 a barrel. Then late in the session, the financial sector rallied, boosting the overall market.

“After two months of nothing but bad news, we just got a couple rays of lasting sunshine to trigger some buying,” said Frederic Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Ore.

Crude futures sank $3.09 to settle at $127.95 a barrel, more than $17 below a record close of $145.29 set July 3.


An index of airline stocks soared 22%, a one-day record, on the price drop and on some better-than-expected profit forecasts.

The Dow rose 135.16 points, or 1.2%, to 11,602.50. The Standard & Poor’s 500 index jumped 17 points, or 1.3%, to 1,277. The Nasdaq composite index, which was down for much of the session on tech earnings disappointments, ended up 24.43 points, or 1.1%, at 2,303.96.

The Russell 2,000 index of smaller companies rose 19.19 points, or 2.8%, to 716.82.

Yields on government bonds rose after the president of the Federal Reserve Bank of Philadelphia said there could be rate hikes “sooner rather than later.” The 10-year Treasury note rose to 4.10% from 4.04% late Monday.


Wachovia fell as much as 12% early in the day, pushing an index of financial stocks down 3.8%, after the bank posted an $8.9-billion loss tied to bad mortgage loans. But the sector turned around after Deutsche Bank banking analyst Mike Mayo said he had become more positive about banking stocks and Wachovia told investors on a conference call that it didn’t expect to sell shares to raise capital.

At the end of the session, Wachovia was up $3.61, or 27%, to $16.79, and the S&P; financial index was up 6.6%.

American Express fell $2.91, or 7.1%, to $37.99 after setting aside more money to cover loan losses.

Among airline stocks, UAL shot up $3.42, or 69%, to $8.41, and JetBlue surged 61 cents, or 16%, to $4.50. US Airways jumped $1.58, or 59%, to $4.27.

Tech stocks fell early in the session after Apple beat profit expectations but issued a weaker-than-expected forecast for the current quarter. Apple shares fell $4.27, or 2.6%, to $162.02. Texas Instruments fell $4.17, or 15%, to $24.35 after it missed expectations because of a slowdown in orders.

In overseas markets, key stock indexes rose 3% in Japan and 0.3% in Germany. Shares edged up in France and fell 0.7% in Britain.