Stocks rise as oil takes downward turn
NEW YORK » The stock market notched its second straight daily advance yesterday, with investors assuaged by a pullback in oil prices and some better-than-expected economic data.
Wall Street has been worried about cash-strapped consumers paring back their spending, so it was pleased that the energy markets gave up early gains that briefly drove crude oil above $125 a barrel.
In other positive signs, the Philadelphia Federal Reserve said regional manufacturing activity is contracting in May at a much slower pace than in April, while major companies including General Electric Co. and CBS Corp. were making deals.
"The encouraging news is that the markets have become more functional, and large companies are able to make strategic purchases and sales, which previously was a very difficult thing to do," said Alan Gayle, senior investment strategist for RidgeWorth Capital Management. Still, he added, "the market is still trying to digest the severity of the slowdown."
Fears of an ongoing credit market paralysis have eased significantly. Federal Reserve Chairman Ben Bernanke said in a speech in Chicago he is "encouraged" by recent efforts by banks to raise cash -- a trend that is helping to relieve the credit crisis.
But, Gayle said, "what we're left with now are cyclical credit strains. And those are likely to linger for a while."
The Dow Jones industrial average rose 94.28, or 0.73 percent, to 12,992.66.
Broader stock indicators advanced more than 1 percent to their highest closing levels since Jan. 3. The Standard & Poor's 500 index rose 14.91, or 1.06 percent, to 1,423.57, and the Nasdaq composite index rose 37.03, or 1.48 percent, to 2,533.73. The Russell 2000 index of smaller companies rose 7.31, or 0.99 percent, to 743.38.
Advancing issues led decliners by more than 2 to 1 on the New York Stock Exchange. Consolidated volume amounted to 3.73 billion shares, down from 3.86 billion shares traded yesterday.
The technology-laden Nasdaq got a boost from Intel Corp., which rose $1.13, or 4.7 percent, to $24.97 after a Lehman Brothers analyst lifted his price target on the chip maker, citing strong product demand.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.82 percent from 3.92 percent late Wednesday.
The dollar was lower against most other major currencies, and gold prices climbed.
In other economic data, the Fed said nationwide industrial output sank for the second straight month in April by 0.7 percent, due to big cutbacks in the automotive and other manufacturing industries. The drop was more than double analysts' average prediction.
The Labor Department said the number of laid off-workers applying for jobless benefits rose last week by 6,000 to 371,000 -- near the average analyst forecast, and suggesting that the labor market remains weak but in check.
In deal-making news, CBS agreed to buy online technology news and entertainment company CNet Networks Inc. for about $1.75 billion. CBS fell 59 cents, or 2.4 percent, to $24.23, while CNet rose $3.47, or 44 percent, to $11.42.
General Electric plans to auction off its Louisville, Ky.-based appliances business, according to the Wall Street Journal. The sale is seen yielding between $5 billion and $8 billion. GE slid 14 cents to $32.37.