Stocks rise despite
crude price surge
NEW YORK >> Investors shrugged off rising crude futures yesterday to capture attractively valued shares, sending the Nasdaq composite index up 2 percent ahead of Google Inc.'s much-anticipated initial public offering of stock. The Dow Jones industrial average rose more than 110 points.
Global fears about terrorism and the premium they've added to oil prices have rattled investors, exacerbating the volatility usually associated with late-summer trading. Analysts remained upbeat about the market's underlying fundamentals, however, and the lack of selling pressure led some to express optimism that the rally, which has lasted through four sessions, might hold.
"People have a tremendous capacity to adapt," said Ken Tower, chief market strategist for Schwab's CyberTrader. "No story stays in the news forever. So it's just possible that the market has now fully discounted higher prices of oil, and is poised to move higher."
According to final calculations, the Dow gained 110.32, or 1.1 percent, to close at 10,083.15. The broader gauges also finished higher. The Nasdaq climbed 36.12, or 2 percent, to 1,831.37. The Standard & Poor's 500 index rose 13.46, or 1.2 percent, to 1,095.17.
The price of the benchmark 10-year Treasury note slipped 38 point. Its yield, which moves in the opposite direction, rose to 4.24 percent from 4.20 percent on Tuesday. The 2-year note lost 1/32 point to yield 2.42 percent, up from 2.40 percent on Tuesday.
Despite the strong performance of tech shares, some analysts questioned the conviction behind the buying. Valuations within the sector, which has been badly bruised, have fallen to appealing levels, but that may not be enough to sustain the rally.
"I wouldn't take today's move as a change in sentiment, or any positive sign at all," said Neil Massa, equity trader at John Hancock Funds. "I think we're still stuck in this trading range. I think investors are truly worried about third and fourth quarter profits. They were expecting a robust recovery ... and it just doesn't look like that's happening."
Investors have grown increasingly worried about inflation in the face of rising energy prices, and a stream of lowered earnings forecasts for the second half of the year has added to that anxiety.
Crude prices surged on worries about lower U.S. inventories and alarm over a Moscow court's ruling against Russian oil giant Yukos, which is struggling to pay back taxes. Oil prices eased briefly when a radical Shiite cleric in Iraq accepted a peace plan, but skyrocketed to a new high by the end of the day, closing up 52 cents at $47.27 on the New York Mercantile Exchange.