Decline in oil prices sends stocks soaring
NEW YORK » Wall Street at least temporarily shrugged off some of its many concerns yesterday and bounded higher thanks to a drop in oil prices. The Dow Jones industrial average rose 276 points, or 2.5 percent, posting its best daily gain in three months.
The broader Standard & Poor's 500 index also gained 2.5 percent, while the technology-dominated Nasdaq composite index surged 3.1 percent. Investors exited government bonds and back into stocks as it appeared that the slowing economy will curtail demand for fuel and, in turn, energy costs.
Light, sweet crude fell $4.14 to settle at $134.60 a barrel on the New York Mercantile Exchange, bringing its two-day decline to $10.58.
In addition to sinking oil prices, investors found relief in a decision by Wells Fargo & Co. to boost its dividend that helped counter some of the market's concerns about the health of banks.
Still, the Labor Department's report that consumer prices shot up in June at the second fastest pace in 26 years reminded investors that inflation still poses a threat to growth.
"I think the pullback in oil is significant. The market and the market participants clearly had digested what the impact was going to be if oil prices had stayed at that level," said Dan Genter, president and chief investment officer of RNC Genter in Los Angeles.
The Dow rose 276.74, or 2.52 percent, to 11,239.28. It was the blue-chips' biggest one-day gain since April 1, when the index rose 391 points.
On Tuesday, stocks ended mostly lower on continuing worries about the financial sector; the Dow logged its first close below 11,000 since July 2006.
Broader stock indicators also rose yesterday after fluctuating in the early going. The S&P 500 index advanced 30.45, or 2.51 percent, to 1,245.36, and the Nasdaq rose 69.14, or 3.12 percent, to 2,284.85.
The Russell 2000 index of smaller companies rose 24.40, or 3.68 percent, to 686.75.
Advancing issues narrowly outpaced decliners by more than 3 to 1 on the New York Stock Exchange, where consolidated volume came to 6.58 billion shares, down from 7.26 billion on Tuesday.
Bond prices declined. The yield on the benchmark 10-year Treasury note, which moves opposite its price, jumped to 3.94 percent from 3.82 percent late Tuesday.
The dollar was mixed against other major currencies, while gold prices fell.
Oil prices declined after Energy Department figures showed that domestic inventories of crude oil and gasoline rose last week.
Wells Fargo & Co. said its second-quarter earnings fell 22 percent. But the company's results beat Wall Street expectations, and investors were pleased by Wells Fargo's decision to raise its quarterly dividend to 34 cents from 31 cents. Wells Fargo rose $6.72, or 32.8 percent, to $27.23.