Oil rebound subdues stocks’ early advance
Stocks finished moderately higher Thursday after giving up a big early advance as the price of oil rose, demonstrating investors’ anxiety about inflation and the overall health of the economy.
Share prices were boosted by an upbeat retail sales report, which also sent government bond yields up sharply.
Word late in the session that Yahoo called off deal talks with Microsoft gave investors another reason to rein in the enthusiasm that followed the Commerce Department’s report that retail sales rose 1% in May, the biggest increase in six months. The report offered hope that the government’s 57 million economic stimulus checks were indeed oiling the economy.
A $46-billion takeover offer for Anheuser-Busch, disclosed late Wednesday, also lifted stocks overall.
The Dow Jones industrial average climbed 57.81 points, or 0.5%, to 12,141.58. The 30-stock index had been up as much as 185 points during the session. A day earlier, the Dow fell more than 200 points because of surging oil prices.
Broader stock indicators ended higher Thursday after dipping into negative territory late in the session. The Standard & Poor’s 500 index rose 4.38, or 0.3%, to 1,339.87, while the Nasdaq composite index rose 10.34 points, or 0.4%, to 2,404.35.
Treasury bond yields jumped Thursday as some investors left the safety of government debt. The yield on the benchmark 10-year T-note soared to 4.21%, its highest level this year, from 4.07% late Wednesday.
The dollar gained against other major currencies, while gold prices fell.
Crude oil futures traded lower for much of the day before bouncing back to settle at $136.74 a barrel, up 36 cents, on the New York Mercantile Exchange.
Among the day’s market highlights:
Lehman Bros. Holdings dropped $1.05, or 4.4%, to $22.70. The firm, which this week said it would report a quarterly loss of $2.8 billion, ousted its top financial and operating executives Thursday.
Yahoo tumbled $2.63, or 10%, to $23.52 after saying its efforts to restart takeover discussions with Microsoft had failed. Microsoft rose $1.12, or 4.1%, to $28.24. After the market closed, Yahoo said it struck an agreement to hand over a piece of its online ad platform to Web search leader Google.
Anheuser-Busch jumped $3.05, or 5.2%, to $61.40 after Belgian brewer InBev offered $65 a share for the U.S. brewer.
DreamWorks Animation SKG slid $1.25, or 4%, to $29.84 after UBS said the box-office success of “Kung Fu Panda” drove the Glendale-based studio’s shares up too far.
Overseas, key stock indexes rose 1.2% in Britain, 1% in Germany and 0.2% in France. Shares in Japan slumped 2.1%.
