Market ends higher, buoyed by drop in oil
NEW YORK » Wall Street rebounded yesterday, rising sharply as oil prices fell and investors took advantage of bargains in financial stocks after two straight days of heavy declines.
Crude backtracked as traders who sent oil soaring Wednesday in response to declining gasoline supplies realized that demand for fuel is still falling. Light, sweet crude fell 99 cents to settle at to $115.01 a barrel on the New York Mercantile Exchange. The pullback helped reassure stock traders who are concerned that rising oil and gas prices would force consumers to keep paring back their spending.
Stocks initially fell after the U.S. Labor Department reported another hefty jump in consumer prices. The 0.8 percent overall rise in July's Consumer Price Index was not as large as June's increase, but it was twice as high as the market expected, and brings inflation to its highest annual pace in 17 years. The core index, which eliminates food and energy prices, is not up as much, but it still rose by 0.3 percent last month -- slightly more than forecast.
But the market turned higher as investors began looking more positively at stock prices that were beaten down the past two sessions amid rising anxiety about credit losses at banks and brokerages.
The Dow Jones industrial index rose 82.97, or 0.72 percent, to close at 11,615.93, after rising more than 180 points earlier in the day. It lost a total of nearly 250 points on Tuesday and Wednesday.
The Standard & Poor's 500 index rose 7.10, or 0.55 percent, to 1,292.93, and the Nasdaq composite index rose 25.05, or 1.03 percent, to 2,453.67.
On the New York Stock Exchange, a relatively light 1.01 billion shares exchanged hands. Advancing issues outnumbered decliners by about 2 to 1 on the NYSE, and about 3 to 2 on the Nasdaq Stock Market.
Bonds rose higher after the Labor Department's data. The yield on the benchmark 10-year Treasury note, which moves opposite its price, dipped to 3.90 percent from 3.94 percent late Wednesday.
The dollar was mixed against other major currencies, while gold prices fell.
The Russell 2000 index, which primarily tracks small companies, rose 6.69, or 0.89 percent, to 754.38.
JPMorgan Chase and Morgan Stanley became the latest financial firms to settle with regulators over their sale of auction-rate securities when they agreed yesterday to repurchase a combined $7 billion of the investments. The companies will also pay a combined $60 million in fines.
JPMorgan Chase rose 90 cents to close at $37.81, while Morgan Stanley rose 49 cents to $40.64.
Airlines also showed sharp gains yesterday, buoyed by the falling price of oil.
AMR Corp., the parent company of American Airlines, gained 42 cents, or 3.9 percent, to $11.28, while UAL Corp., operator of United Airlines, rose 62 cents, or 5.1 percent, to $12.68. Delta Air Lines Inc. rose 48 cents, or 5.8 percent, to $8.82.