Stocks end higher as oil falls sharply
NEW YORK » Stocks ended a back-and-forth session with modest advances yesterday as a sharp drop in oil prices helped counter renewed concerns about the strength of the economy.
Oil fell nearly $5 per barrel after China announced plans to raise caps on gasoline and diesel fuel prices, a move that could ease global demand. The pullback in oil was welcome after weeks in which rising prices have pinned down investor sentiment with fears that the run-up would force businesses and consumers to curb spending.
But worrisome comments from Citigroup Inc. perhaps damped some investors' spirits. The bank warned that a "substantial" amount of write-downs on bad debt are still to come. The remarks from Citi's chief financial officer, Gary Crittenden, sent Citigroup shares lower and at times weighed on the financial sector. Citi was among the steepest decliners of the 30 stocks that make up the Dow Jones industrial average. Citigroup fell 23 cents to $20.17.
But while Citi's comments about faltering debt renewed worries about credit markets, the drop in oil seemed to encourage some investors to buy stocks.
"It really seems to be a tug-of-war between the good news and the bad news, or the not-as-bad news and the terrible news," said Jennifer Ellison, principal with wealth management firm Bingham, Osborn & Scarborough in San Francisco. "I think it's going to be hard for the market to find a trend when there is still this undercurrent of bad economic data and negativity in the financial sector and the high price of oil."
The Dow rose 34.03, or 0.28 percent, to 12,063.09. The Dow traded below the 12,000 mark in Wednesday's session for the first time since mid-March and sank below it briefly again in trading yesterday. Though the Dow fell by more than 100 points Wednesday it managed to finish above the 12,000 mark.
Broader stock measures also advanced. The Standard & Poor's 500 index rose 5.02, or 0.38 percent, to 1,342.83, and the Nasdaq composite index jumped 32.35, or 1.33 percent, to 2,462.06.
Advancing issues narrowly outpaced decliners on the New York Stock Exchange, where consolidated volume came to 4.44 billion shares, essentially flat with Wednesday.
The Russell 2000 index of smaller companies rose 7.12, or 0.97 percent, to 737.83.
Volatility is likely to continue today because of the expiration of options contracts. Known as "quadruple witching," it marks the simultaneous expiration of contracts for stock index futures, stock index options, stock options and single stock futures and often leads to heavy trading near the start and end of the session.
Crude oil futures fell $4.75 to settle at $131.93 per barrel on the New York Mercantile Exchange after China disclosed plans to raise prices for gasoline and diesel fuel by 16 percent and 18 percent, respectively.
Bond prices fell as stocks fluctuated. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 4.21 percent from 4.14 percent late Wednesday.
The dollar traded mixed against other major currencies, while gold prices rose.