Closing Market Report
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Decline in oil prices give stocks a boost
By Joe Bel Bruno
AP Business Writer
NEW YORK » Wall Street advanced in uneven trading yesterday after a drop in oil prices and an unexpected gain in new home sales encouraged investors to put money back into the market.
Stocks picked up momentum late in the session as oil prices drifted below $129 a barrel. This helped ease investor concerns about the effect of soaring energy and food prices on consumers, who account for more than two-thirds of U.S. economic activity.
With gas prices up sharply from a year ago, many on Wall Street are worried that nervous consumers will stop reaching into their wallets for discretionary purchases. That was confirmed by fresh data from the Conference Board, which said its Consumer Confidence Index dropped for the fifth straight month and is now at its lowest level since October 1992.
Investors were also somewhat reassured after the Commerce Department said sales of new homes rose 3.3 percent in April to a seasonally adjusted rate of 526,000 units. In March, sales had fallen 11 percent to their weakest pace since 1991.
The three major indexes traded with uncertainty through most of the session, and showed investors remained hesitant to place big bets. Many on Wall Street believe there is still plenty to be cautious about.
"You have a problematic scenario: falling home prices, rising food and energy prices, the credit crunch, and the labor market isn't doing that well," said Stephen Carl, principal and head of equity trading at the Williams Capital Group. "We're going through this period right now, and it's going to take some time to come out of it."
The Dow Jones industrial average rose 68.72, or 0.55 percent, to 12,548.35.
The Standard & Poor's 500 index rose 9.42, or 0.68 percent, to 1,385.35, and the Nasdaq composite index rose 36.57, or 1.50 percent, to 2,481.24. The Russell 200 index of smaller companies rose 10.29, or 1.42 percent, to 734.39.
Advancing issues led decliners by 3 to 2 basis on the New York Stock Exchange, where consolidated volume came to 3.39 billion shares, compared to 3.34 billion on Friday.
The advance came after the Dow lost 3.91 percent last week -- its worst showing since February -- while the other indexes showed similar declines. Investors sold off stocks amid concerns about rising energy prices and after a sizable run-up since the market's lows in mid-March.
Bond prices fell yesterday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.92 percent from 3.85 percent late Friday.
A barrel of light sweet crude fell $3.34 to settle at $128.85 on the New York Mercantile Exchange. Gold fell, while the dollar gained.
Earlier in yesterday's session, the Standard & Poor's/ Case-Shiller home price index indicated that prices fell 14.1 percent during the quarter. However, the drop was expected by most investors -- and the government's report on new home sales was considered more important because it is the most recent gauge on the industry.
Federal Reserve Bank of San Francisco President Janet Yellen, who is not a voting member of the central bank, said in prepared comments for a speech in California that any interest rate hikes are still some way off. She also reiterated that the economy should pick up during the second half.
