US stocks rise despite oil concerns
A late surge in buying sent US stocks sharply higher today as a strong oil inventory report helped investors look past rising crude prices and mediocre economic data.
There were reasons for optimism in the Energy Department’s weekly inventory report, which showed strong reserves in petrol, heating oil and other distillates. The report served to slow, but not stop, the big jump in oil prices seen this week.
A barrel of light crude closed at 51.39, up 22 cents, on the New York Mercantile Exchange.
Combined with the rather unimpressive economic data showing a slight rise in unemployment and a dropoff in orders for big-ticket items, the fact that the markets did not slide further earlier in the session boosted investors’ confidence.
“I think you’re seeing a lot of institutional money that was put to work this afternoon,” said Chris Johnson, manager of quantitative analysis at Schaeffer’s Investment Research in Cincinnati. “Stocks traded pretty narrowly most of the day but didn’t give ground, and we’re seeing a bounce off that.”
The Dow Jones industrial average rose 75.00, or 0.7%, to close at 10,748.79.
Broader stock indicators also gained ground. The Standard & Poor’s 500 index was up 9.40, or 0.79%, at 1,200.20, and the Nasdaq composite index gained 20.45, or 1.0 %, to close at 2,051.70.
Wall Street was unimpressed with the government’s latest economic data, which contributed to the market’s early uncertainty. The Commerce Department said orders for durable goods – items built to last at least three years – fell 0.9% in January, the worst showing in three months. The Labour Department reported a larger-than-expected increase in first-time unemployment claims.
The middling economic figures failed to lift the dollar, which fell against the euro and was mixed against other currencies. Gold rose modestly, while bonds slipped following the oil inventory report, with the yield on the 10-year Treasury bond rising to 4.29 %.
With those factors in mind, the market’s late move higher may not be a sign of a strong rally, analysts said, especially with the dollar still low and oil prices above US$50 (€37.91) per barrel – both of which have spurred fears of inflation on Wall Street.
“What does the inflation picture look like? That’s the big question, and it still hasn’t been answered in a real way,” said Will Gourd, global investment specialist at JP Morgan Private Bank. “I think the market could be kind of cranky here.”
A sharp drop in internet search engines pressured tech stocks. Time Warner announced its America Online unit would launch its own search engine for local information, which investors saw as a new phase in the battle for internet search customers. Time Warner was down 34 cents at 17.38, while Google tumbled 5.06 to 188.89, Yahoo! Dropped 64 cents to 31.48 and Ask Jeeves shed 1.48 to 21.77.
In earnings news, Viacom recorded a fourth-quarter loss due to one-time charges related to write-downs in its radio and billboard units. Charges aside, the media giant beat Wall Street expectations by 4 cents per share. Viacom lost 89 cents to 35.28.
Department store chain JC Penney lost 5 cents to 44.10 after the company swung to a profit in the fourth quarter and beat Wall Street forecasts by 5 cents per share. The company also gave a strong outlook for the current quarter’s sales.
Office products retailer Staples saw a 19% jump in fourth-quarter profits thanks to strong gains in its international operations and its North American delivery business. The company matched analysts’ forecasts. Staples climbed 49 cents to 32.30.
Krispy Kreme Doughnuts skidded 39 cents to 5.36 after the company said it is the subject of a probe by the Justice Department. The US Securities and Exchange Commission is already investigating the company’s accounting.
Advancing issues outnumbered decliners by about 9 to 5 on the New York Stock Exchange, where volume was moderate.
The Russell 2000 index of smaller companies was up 7.02, or 1.13%, at 627.56.
