Stocks break free
of oil price fears
NEW YORK » Investors put aside concerns about rising oil prices yesterday, helping the market to a late day rally focused on generally positive economic news.
The major stock indexes gained ground during the final two hours of the trading session, even after the price of oil momentarily crossed $66 a barrel. It finished at a record high close of $65.80 a barrel, up 90 cents on the New York Mercantile Exchange.
"I think in the end people want to be bullish," said Doug Sandler, chief equity strategist at Wachovia Securities in Richmond, Va. "Some of that is a trend building on a trend -- the market starts to go one way and everybody seems to jump on it."
But the ups and downs in stock prices seen yesterday, following a selloff Wednesday, reflects persistent worries by investors that, despite strong corporate earnings and upbeat economic reports, oil prices will eventually exact a toll.
"Ordinarily you would expect the stock market to rise or do better, but it's not and I think the reason it's not is it's being held in check by high oil prices," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors in Albany, N.Y.
The Dow Jones industrial average finished up 91.48, or 0.86 percent, at 10,685.89, after giving up a triple digit advance Wednesday and closing down 21.
Broader stock indicators also closed higher. The Standard & Poor's 500 index rose 8.68, or 0.71 percent, to 1,237.81, and the Nasdaq composite index rose 16.74, or 0.78 percent, to 2,174.55.
But analysts say the market of the moment is often difficult to figure by looking at the indexes, particularly the Dow. Oil prices and the concerns they seed about macroeconomic performance are having the greatest impact on the largest companies. That was the case Wednesday, when much of the selloff focused on large-cap stocks.
But economic optimism is driving demand for the stock of many small, mid-sized and even large companies just below the threshold of the indexes, analysts said.
The market showed yesterday it is still torn between concerns that more expensive oil will inevitably hurt consumer spending and corporate profits and evidence that the economy is coping well with higher crude.
A report released Wednesday showing a decline in U.S. gasoline inventories drove fears about supply. It heightened concerns that refinery shutdowns will make it difficult for refiners to meet peak summer demand.