Dow climbs 130
in thin trading
A solid outlook for
home improvement retailers
and a fall in oil prices help
spur the market
NEW YORK >> A drop in oil prices and upbeat outlooks from Wal-Mart and Lowe's helped send stocks sharply higher yesterday on Wall Street, with the swing exaggerated by thin late summer trading. The Dow Jones industrials surged nearly 130 points.
Volume was light on Wall Street, even as the retail sector's rare good news helped shares, as many investors were tentative about the rally, hoping for better economic news in the week ahead. A critical reading on consumer prices and inflation was expected today.
Falling oil prices spurred by the orderly recall vote in Venezuela, the Western Hemisphere's largest oil producer, also helped shares recover from last week's volatile trading. A barrel of light crude was quoted at $46.05, down 53 cents, on the New York Mercantile Exchange.
"Everything is priced into oil being as high as it is," said Todd Leone, managing director of equity trading at SG Cowen Securities. "You see oil go down, stocks will go up. Plus, this market is really cheap right now, so it's going to be pretty attractive for buyers."
The Dow gained 129.20, or 1.3 percent, to 9,954.55.
Broader stock indicators were also higher. The Standard & Poor's 500 index advanced 14.54, or 1.4 percent, to 1,079.34. The Nasdaq composite index was up 25.62, or 1.5 percent, at 1,782.84.
The price of the benchmark 10-year Treasury note fell 932 point. Its yield, which moves in the opposite direction, rose to 4.27 percent from 4.23 percent late Friday.
The 2-year note slipped 1/32 point to yield 2.47 percent, up from 2.46 percent.
The market shrugged off a disappointing drop in the U.S. Empire State Manufacturing Index, a measure of industrial activity in the New York area. According to the Federal Reserve Bank of New York, the index came in at 12.6 in August, the lowest reading since May 2003, and down from 35.6 in July. Any reading above zero means expansion in manufacturing has occurred.
Investors got some comfort after initial results suggested Venezuelan President Hugo Chavez won a recall referendum, easing fears of a disruption in supply from the world's fifth-largest exporter. A smooth start to the Olympic Games in Athens also helped reduce fears of terrorism.
However, coming off of last week's volatile trading, most analysts were not looking to yesterday's gains as a sign that the markets were ready for a serious rally.
"You can't read anything into these one-day snap-backs," said Bryan Piskorowski, market analyst at Wachovia Securities.