Lower crude prices outweigh retail slide
NEW YORK » Wall Street struggled but ultimately closed higher yesterday as a bounce in technology stocks and sharply lower oil prices helped investors brush off concerns about sluggish consumer spending.
Retailers' lackluster holiday sales reports initially sent major stock indexes significantly lower. Stocks climbed back after a drop in crude prices to below $56 a barrel raised hopes that cheaper gasoline might be on the way.
A broad advance from chip stocks supported the market. Leading the way was Intel Corp., which surged to its highest level in two weeks after Banc of America Securities said it expects fourth-quarter results will come in higher than expected.
The market's performance yesterday showed investors remain uneasy about any economic data, especially after minutes from the Federal Reserve's last meeting indicated policymakers were in no hurry to cut interest rates. Mixed data yesterday included disappointing housing and service-sector reports.
"People are thinking now that energy prices are coming down, and that gives a chance for technology and other sectors to perform better," said Scott Fullman, director of investment strategy for Hapoalim Securities USA. "The broader picture is that the economy continues to show signs of slowing, and that will continue through the first quarter."
The Dow Jones industrial average rose 6.17, or 0.05 percent, to 12,480.69. The index had dropped by about 50 points earlier in the session.
Broader stock indicators were higher. The Standard & Poor's 500 index edged up 1.74, or 0.12 percent, to 1,418.34, and the tech-dominated Nasdaq composite index added 30.27, or 1.25 percent, to 2,453.43.
Bond prices moved higher, with the yield on the benchmark 10-year Treasury note falling to 4.61 percent from 4.66 percent late Wednesday. Yields have moved decidedly lower during the past few week as it has became apparent there's no impending interest rate cut from the Fed.
Also sending bond yields lower was the Institute of Supply Management's services sector index for December, which showed growth slowed from November.
"What you're seeing is just a tug of war between concerns the housing market is still weighing us down, and the wheelbarrows full of liquidity that want to go somewhere," said Kevin Gaughan, portfolio manager and equity strategist at Strong Financial Corp.
But the drop in oil prices continued to be the biggest influence on the markets. Oil prices slid for a second day after the government reported inventories of gasoline, heating oil and diesel fuel rose more than analysts expected.