US stocks up as oil prices fall
US stocks managed to extend their gains into a second session today as a bright outlook from Oracle and better-than-expected results from chipmaker Texas Instruments lifted the technology sector.
Despite the day’s strong trading, some analysts were sceptical about whether the gains would hold, particularly after three weeks of persistent declines.
Since the beginning of the year, stocks have tended to lose momentum after robust starts, even in the face of good earnings and positive economic data.
“I think we’re seeing some money being put to work because we’re getting toward the end of the month ... but in general that pattern is less than encouraging,” said Todd Clark, head of listed equity trading at Wells Fargo Securities. “We keep giving back the gains, and I’d like to see that broken.”
The Dow Jones industrial average rose 37.03, or 0.35%, to 10,498.59.
The broader gauges also closed higher. The Standard & Poor’s 500 index was up 5.66, or 0.48%, at 1,174.07. The Nasdaq composite index rose 26.14, or 1.29%, to 2,046.09.
Oil prices were volatile after the US government and an industry group issued mixed reports on fuel inventories.
The government’s weekly report, which is most closely watched, showed a jump in crude stores, a sharp drop in petrol supplies and an expected draw in distillates, which include heating oil.
However, the American Petroleum Institute reported steep declines in all three categories.
The government’s report of a build in crude alleviated pricing pressure, and crude futures declined 86 cents to US$48.78 (€37.31) on the New York Mercantile Exchange. Oil prices were still hovering uncomfortably close to the US$50 (€38.24) mark, however, amid growing anxiety about trouble in the Mideast ahead of the upcoming elections in Iraq.
Investors also focused on earnings and forecasts during a week when hundreds of companies were releasing results. The spate of good news and momentum from the previous session raised some hope that investors would return to the market in greater numbers.
“I think it feels like we might be able to hold a few days to the upside, assuming corporate earnings news continues to cooperate,” said Jack Caffrey, equities strategist at JP Morgan Private Bank.
“The good news is, the good news is spread around today. It’s not like people are taking their cue from any one datapoint. It seems to make for a somewhat healthier backdrop.”
Texas Instruments surged 7.3 %, or 1.54, to 22.66, as the maker of chips for cell phones beat Wall Street’s expectations despite a dip in fourth-quarter profits compared to a year ago.
The company warned that first-quarter revenue would be lower due to seasonal slowness and a buildup of inventory. Merrill Lynch upgraded the stock to “neutral” from “underperform”, citing a belief that the company was more likely to meet estimates in 2005.
Software maker Oracle gained 3 to 13.62 after reiterating its outlook for the current fiscal year and sharply raising its forecast for 2006, citing likely earnings gains related to its acquisition of PeopleSoft.
Sirius Satellite Radio shed 6 to 6.18 after posting wider fourth-quarter losses. Still, holiday sales drove revenues up fivefold, prompting the company to raise its 2005 year-end subscriber estimate.
ConocoPhillips added 1.59 to 90.49 after more than doubling its fourth-quarter income due to high prices for crude and natural gas prices and better refining margins. The nation’s third-largest oil company beat estimates by a wide margin.
Advancers outnumbered declining issues by almost 3 to 1 on the New York Stock Exchange.
The Russell 2000 index, which tracks smaller company stocks, was up 10.07, or 1.66%, at 616.57.
