US stocks up in oil-prices recovery
Stocks advanced on Wall Street yesterday, capping a strong week, helped by a recovery in the price of oil and earnings from Olive Garden owner Darden Restaurants and sportswear giant Nike.
The Nasdaq composite index inched closer to its all-time high set at the height of the dot-com bubble.
Once again, it was the Federal Reserve affecting much of this week’s market movement.
The Fed implied at the end of its two-day meeting on Wednesday that its policymakers were in no hurry to raise interest rates with the US economy still growing slowly and inflation extremely low. Yesterday’s rally was partly an extension of that, strategists said.
“The trepidation in the market before the Fed announcement has disappeared,” said Kristina Hooper, US investment strategist at Allianz Global Investments.
The Dow Jones industrial average rose 168.62 points, or 0.9%, to 18,127.65. The Standard & Poor’s 500 index rose 18.79 points, or 0.9%, to 2,108.06 and the Nasdaq composite added 34.04 points, or 0.7%, to 5,026.42.
The Nasdaq closed 22 points from the record high of 5,048 it set in March 2000. It has taken the Nasdaq 15 years to recover from the dot-com bubble, while the S&P 500 and Dow recovered their losses in 2007 and 2006, respectively.
Dow member Nike was among the biggest gainers yesterday, rising 3.66 dollars, or 3.7%, to $101.98. Nike’s results beat expectations, but investors focused more on the fact that foreign sales remain strong despite the rising dollar and overseas market volatility.
The rapid rise in the dollar has been a particular sore spot for investors. The dollar is up more than 8% against the major currencies this year, which makes goods made in the US more expensive abroad and has had a direct negative impact on sales.
The dollar rose to 120.09 yen from 120.76 yen on Thursday. The euro rose to $1.0809 from $1.0668 the previous day.
The latest example was jewellery maker Tiffany & Co, which cut its full-year profit forecast, saying the higher dollar was making its products less attractive to foreign buyers. Tiffany’s stock fell 3.44 dollars, or 4%, to 82.93 dollars.
“The dollar’s appreciation has been rapid and it’s become a problem for many of these companies who have significant exposure to foreign markets,” said Russ Koesterich, BlackRock’s global chief investment strategist.
Oil also helped the market yesterday. After dropping more than 3% on Thursday, US benchmark oil for April delivery jumped 1.76 dollars, or 4%, to 45.72 dollars a barrel. Energy stocks rose far more than the rest of the market. The S&P 500’s energy sector gained 2%.
Oil ended a volatile week up 2% even after dropping to its lowest level in six years on Tuesday. Oil inventories are at record highs, but the number of rigs drilling for oil is falling fast and a sliding U.S. dollar is making oil a more attractive investment to overseas buyers.
Brent crude, the international standard, rose 89 cents, or 1.6%, to 55.32 dollars a barrel.
