Lower oil price boosts US stocks
Falling oil prices and a broker upgrade of the semiconductor sector pushed stocks higher today, enticing buyers back into the market after the previous session’s losses.
Technology shares climbed as both J.P. Morgan Securities and Lehman Brothers upgraded the chip sector. Morgan cited “a more bullish view” of the industry. Technology shares have lagged as other stocks moved up last month, and investors greeted the news as a sign that the recovery was finally spreading to the tech sector.
A drop in oil prices helped feed buying in stocks, as investors hoped that crude futures would not pass 52 per barrel. Light, sweet crude for April delivery fell 7 cents to US$51.68 (€39.20) a barrel on the New York Mercantile Exchange.
“With oil lower, you’re seeing the market move broader, moving out of energy stocks and into everything else,” said Jay Suskind, head trader at Ryan Beck & Co.
“Just across the board, there’s a sense the market wants to move higher this spring.”
The Dow Jones industrial average rose 63.77, or 0.59 %, to 10,830.00.
Broader stock indicators also closed higher. The Standard & Poor’s 500 index was up 6.81, or 0.57 %, at 1,210.41, and the Nasdaq composite index gained 19.53, or 0.95 %, to 2,071.25.
Investors were disappointed with the Institute for Supply Management’s manufacturing index for February, which came in at 55.3, lower than the reading of 57 economists expected and down from January’s 56.4. However, those fearing inflation could see the report as good news, since a slide in demand for industrial goods bodes well for lower prices.
Some investors awaited Federal Reserve Chairman Alan Greenspan’s testimony before the House Budget Committee on Wednesday, hoping that the Fed chief’s assessment of the economy will further boost stocks.
“I think we’re doing pretty well here, but we’ll see what Greenspan says tomorrow,” said Bill Groenveld, head trader for vFinance Investments. “Ideally, that could help us break through our highs for the year.”
The dollar gained ground against the euro and other major currencies, with traders expecting Greenspan to argue for a stronger dollar before Congress. Gold prices fell, and bonds turned bearish toward the end of the session, with the yield on the 10-year Treasury note settling at 4.38 %.
The chip sector upgrades boosted a number of individual semiconductor stocks. Dow Jones industrials component Intel Corp. rose 63 cents to 24.62, Texas Instruments Inc. was up 68 cents at 27.15 and National Semiconductor Corp. climbed 70 cents to 20.65.
Qwest Communications International Inc. continued to press its case for an US$8bn (€6bn) merger with MCI Inc., which has already agreed to a 6.7m (€5.08m) takeover by Verizon Communications Inc.
Qwest executives said up to 15,000 jobs would be cut in its proposal, more than double the job cuts projected in the Verizon deal. Qwest rose 15 cents to 4.05, while MCI gained 61 cents to 23.36; Verizon added 28 cents to 36.25.
In earnings news, Marsh & McLennan Cos. Inc. gained 35 cents to 33, even after the embattled insurer swung to a loss for the latest quarter due to cost cutting and a settlement with New York’s attorney general for improper business practices. The company also said it would lay off up to 2,500 workers.
Advancing issues outnumbered decliners by more than 3 to 2 on the New York Stock Exchange.
The Russell 2000 index of smaller companies was up 4.47, or 0.71 %, at 638.53.
