Stocks withstand terror plot scare
NEW YORK » Wall Street withstood the news of a terror plot targeting commercial airlines yesterday, with stocks moving higher on strong corporate earnings reports and a sharp drop in oil prices.
European markets tumbled as British authorities said 24 people were arrested in a widespread plan to destroy numerous international flights, and the United States raised its terror alert to the highest levels ever for air travelers.
But while U.S. and international airline stocks fell as a result, strong earnings reports from Dow component American International Group Inc. and others lent support to U.S. markets.
Wall Street also benefited from lower crude prices, which fell on the belief that reduced travel in the coming weeks and months would curtail demand for fuels. A barrel of light crude settled at $74, down $2.35, on the New York Mercantile Exchange.
"With the whole issue of what's happening in London, we could have seen a major sell-off, but we didn't," said Stuart Freeman, chief equity strategist for A.G. Edwards & Sons. "All these things that have happened lately, with inflation and interest rates and oil, you'd think the market would have had a really difficult time with that. But there's some upside here."
The Dow Jones industrial average rose 48.19, or 0.44 percent, to 11,124.37.
Broader stock indicators also rose. The Standard & Poor's 500 index added 5.86, or 0.46 percent, to 1,271.81, and the Nasdaq composite index gained 11.46, or 0.56 percent, to 2,071.74.
Advancing issues outnumbered decliners by more than 9 to 7 on the New York Stock Exchange, where volume came to 1.6 billion shares, compared with 1.72 billion traded Wednesday.
The Russell 2000 index of smaller companies was up 5.22, or 0.77 percent, at 686.27.
In Europe, Britain's FTSE 100 slid 0.63 percent, Germany's DAX index tumbled 1.26 percent, and France's CAC-40 fell 0.97 percent. Japan's Nikkei stock average slipped 0.16 percent in earlier trading.
Bonds edged higher in listless trading, with the yield on the benchmark 10-year Treasury note falling to 4.93 percent from 4.94 percent late Wednesday.
The dollar was mixed against most major currencies, while gold prices fell.
In economic news, the nation's trade deficit slipped 0.3 percent in June due to strong sales of U.S. products abroad, while first-time jobless claims edged higher last week.
The trade data shows economic strength, which could spur inflation and higher interest rates, while the unemployment report shows a slowing economy, which ought to help reduce inflation risk.