Stocks end higher; bond prices soar
NEW YORK » Wall Street gave up a big early advance as the price of oil rose yesterday, with stocks closing moderately higher but also demonstrating how anxious investors are about inflation and the overall health of the economy. Bond prices fell sharply and yields shot higher in response to an upbeat retail sales report.
Word late in the session that Yahoo Inc. called off talks of any deal with Microsoft Corp. gave investors one more reason to rein in the enthusiasm that drove the day's early rally.
Advancing oil prices, which have frequently sent stocks tumbling in recent weeks, stifled the optimistic mood that followed the Commerce Department's report that retail sales rose 1 percent in May. The gain marked the biggest improvement in six months and it offered some investors hope that the government's 57 million economic stimulus checks were indeed oiling the economy. A buyout bid for Anheuser-Busch Cos. also lifted stocks.
But the turnaround in oil set off renewed worries about inflation and its effect on the economy. And a management shakeup at Lehman Brothers Holdings Inc. drew fresh attention to troubles in the financial sector. Lehman, which earlier this week said it would report a quarterly loss of $2.8 billion, yesterday ousted its chief financial officer and chief operating officer. Lehman fell $1.05, or 4.4 percent, to $22.70.
The Dow rose 57.81, or 0.48 percent, to 12,141.58 after being up as much as 185 points earlier. The advance came a day after the Dow fell more than 200 points because of surging oil prices.
Broader stock indicators ended higher yesterday after dipping into negative territory late in the session. The Standard & Poor's 500 index rose 4.38, or 0.33 percent, to 1,339.87, while the Nasdaq composite index rose 10.34, or 0.43 percent, to 2,404.35.
Advancing issues narrowly outnumbered decliners on the New York Stock Exchange, where volume came to 1.33 billion shares compared with 1.39 billion shares Wednesday.
The Russell 2000 index of smaller companies rose 1.96, or 0.27 percent, to 719.84.
Bond prices fell yesterday as some investors left the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its prices, soared to 4.21 percent from 4.07 percent late Wednesday.
The dollar rose against other major currencies, while gold prices fell.
Light, sweet crude rose 36 cents to settle at $136.74 a barrel on the New York Mercantile Exchange. Oil prices, which have been volatile lately, fell then bounced higher yesterday amid concerns about supply disruptions.
In corporate news, Yahoo fell $2.63, or 10.1 percent, to $23.52 after saying its efforts to restart takeover discussions with Microsoft failed. Yahoo is expected to announce it struck an agreement to hand over a piece of its online ad platform to Internet search leader Google Inc. Microsoft rose $1.12 to $28.24.
Belgian Brewer InBev SA, whose brands include Beck's and Stella Artois, offered late Wednesday to buy Anheuser-Busch, the maker of Budweiser, Bud Light and other brands for $65 per share. Anheuser-Busch rose $3.05, or 5.2 percent, to $61.40.