Stocks advance as oil slips from highs
NEW YORK » Wall Street steadied itself yesterday after two sessions of steep declines, rebounding moderately as oil prices stepped back from their frenetic upward run.
Oil set another trading record overnight -- moving above $135 per barrel for the first time -- then pulled back below $131, offering some relief for stock investors. Meanwhile, the Labor Department said the number of workers seeking unemployment benefits declined by 9,000 last week to 365,000. The market expected a slight increase.
But the economic fallout from ascendant energy prices remained Wall Street's focus.
"People are concerned about the economy and what's happening with oil," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York, referring to the advance in stocks.
Fullman predicted the markets will remain jittery, and said the low trading volumes yesterday indicate the gains are coming without much conviction.
The modest rise in stocks followed a decline in the Dow Jones industrial average that totaled about 427 points, or 3.3 percent, over the course of Tuesday and Wednesday. It was the steepest two-day loss since late February. Stocks have declined in three of the past four sessions.
The Dow rose 24.43, or 0.19 percent, to 12,625.62.
Broader stock indicators also moved higher. The Standard & Poor's 500 index rose 3.64, or 0.26 percent, to 1,394.35, and the Nasdaq composite index rose 16.31, or 0.67 percent, to 2,464.58. The Russell 2000 index of smaller companies rose 5.90, or 0.81 percent, to 733.01.
Advancing issues outnumbered decliners by about 9 to 7 on the New York Stock Exchange. Consolidated volume amounted to 3.85 billion shares, down from 4.41 billion shares on Wednesday.
Even with the declines of more than 2 percent in the major indexes this week, stocks are still well off their mid-March lows. The Dow is 7.5 percent above its close of 11,740.15 on March 10, when investors were preoccupied with worries over the soundness of the credit markets. Since then, Wall Street has reshuffled its list of concerns, placing greater emphasis on the well-being of the overall economy, not just the troubled financial sector.
Bond prices fell sharply yesterday. The yield on the benchmark 10-year Treasury note rose to 3.92 percent from 3.81 percent late Wednesday.
Light, sweet crude fell $2.36 to settle at $130.81 a barrel on the New York Mercantile Exchange, pulling back from an earlier record of just above $135. That retreat helped the stock market find some stability after two days of drops.
"Hopefully it will last. But I think oil's been scaring people," said Todd Leone, managing director of equity trading at Cowen & Co. He pointed out that the airline industry is getting particularly hard hit, which "slows down the whole economy a bit."
The dollar was mixed against other major currencies, while gold prices fell.
In corporate news, Ford Motor Co. warned that it no longer expects to return to profitability by next year and that it is trimming North American production of pickups and SUVs for the rest of this year because of high gas prices and a shaky economy. The automaker also lowered its forecasts for U.S. sales for 2008. Ford fell 64 cents, or 8.2 percent, to $7.16.