Stocks close higher after volatile trading
NEW YORK » Stocks ended higher in volatile trading today as investors weighed fears about mounting tension in Iran against a report that indicated better-than-expected U.S. economic growth.
The major indexes bounced around, and spent most of the session looking for direction as crude prices surged to a six-month high. Investors remain nervous about the West's response to British sailors held captive in Iran, and oil prices crossed the $66 mark.
This offset the U.S. Commerce Department's final measure of fourth-quarter gross domestic product, which showed growth of 2.5 percent. That could help quell concerns the economy is slowing too quickly. At the same time, strong economic growth could make it harder for the inflation-wary Federal Reserve to cut short-term interest rates.
Investors also bought-and-sold stocks to window dress their portfolio ahead of Saturday's end of the first quarter. The modest advance snapped a three-day losing streak for the Dow Jones industrials.
"The market is at a pivotal point," said Scott Fullman, director of investment strategy for Israel A. Englander & Co. "The market has become more volatile, and more sensitive, to news items."
The Dow rose 48.39, or 0.39 percent, to 12,348.75. The index climbed as high as 12,381.91 during the morning session.
Broader stock indicators also finished higher. The Standard & Poor's 500 index rose 5.30, or 0.37 percent, to 1,422.53, and the Nasdaq composite index edged up 0.78, or 0.03 percent, to 2,417.88.
The Russell 2000 index of smaller companies rose 1.54, or 0.19 percent, at 798.94.
Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where volume came to 2.81 billion shares, down from 2.88 billion Wednesday.
Bonds slipped, with the yield on the benchmark 10-year Treasury note rising to 4.64 percent from 4.62 percent late Wednesday.
The dollar fell against other major currencies, while gold prices tumbled.
Oil prices extended their gains yesterday after settling at their highest level since mid-September on Wednesday amid political tensions in the Middle East. Declining U.S. supplies amid high demand also drove up prices.
Light, sweet crude rose $1.95 to settle at $66.03 a barrel on the New York Mercantile Exchange, after rising as high as $66.50.
The recent rise in oil prices generally poses a concern as increased energy costs could curb consumer spending and add to inflationary pressures.
Wall Street got little feedback from policymakers after a number of Fed officials gave speeches.
Federal Reserve Bank of Minneapolis President Gary Stern was upbeat about the U.S. economy, but refrained from connecting that outlook to the future path of monetary policy.
Earlier in the session, the U.S. Labor Department released a report that showed the number of newly laid-off workers signing up for unemployment benefits last week declined. This suggests the job market is still in good shape even as the economy goes through a sluggish spell.