Bullish news drives markets higher
NEW YORK » Wall Street managed a modest gain yesterday after investors fretted over the impact of falling oil prices but were nonetheless inspired to buy following upbeat news from Alcoa Inc. and Apple Inc.
The market began the session with fresh concern that oil's decline would hurt profits in the energy sector and scare off money from sources like hedge funds that have helped push stocks higher in recent months. Adding to that sense was a profit warning from Chevron Corp. Investors' unease about sliding prices was a marked departure from that seen last summer and in subsequent months, when rising oil raised the specter of a jump in inflation.
Investors eventually turned their attention to bullish news such as word that US Airways Group Inc. raised its bid for Delta Air Lines Inc. by 20 percent to $10.2 billion. They were also pleased by news from Apple, which unveiled long-awaited plans for a mobile phone, as well as by a solid profit report from Alcoa.
"There are good underlying economic fundamentals. The buyers are starting to get a little more courageous in coming off the sidelines," said Al Goldman, chief market strategist with A.G. Edwards & Sons. "Markets take a rest, and the sellers do their dastardly deeds and the buyers become a little more aggressive and then you lift up."
The Dow Jones industrial average rose 25.56, or 0.21 percent, to 12,442.16.
Broader stock indicators also rose. The Standard & Poor's 500 index rose 2.74, or 0.19 percent, to 1,414.85, and the Nasdaq composite index rose 15.50, or 0.63 percent, to 2,459.33.
Bonds fell on the slide in oil prices and following a report that the U.S. trade deficit narrowed in November. Both trends were seen as boosting the economy, and perhaps leading to a rise in interest rates.
Yesterday's trading resembled that of Monday, in which stocks were lower for much of the session before moving higher near the close. The gains yesterday weren't widespread, however, as advancing issues nearly equaled decliners on the New York Stock Exchange. Consolidated volume came to 2.82 billion shares compared with 3.02 billion Tuesday.
Light, sweet crude was down $1.62 at $54.02 a barrel on the New York Mercantile Exchange. Prices have been hurt as unseasonably high temperatures have weakened demand in large parts of the U.S and Europe. Oil fell further yesterday after weekly domestic inventory data from the Energy Department showed a drop of 5 million barrels of crude and an increase of 5.4 million barrels of distillates such as home heating oil.