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Shifting sentiment
aids stock comeback
NEW YORK >> Investors heartened by signs of a stabilizing economy and a steep decline in oil prices propelled stocks sharply higher yesterday, giving the Dow Jones industrials and Standard & Poor's 500 index their best day in two months.
Analysts said investors may have interpreted a new report on consumer confidence yesterday as a sign that economic growth is moderating. That helps eases worries about inflation and seed hopes of strong, consistent corporate profits in coming months, they said.
"The market is a lot more receptive to a lessening of growth as opposed to an acceleration of growth," said Ned Riley, chief investment strategist at State Street Global Advisors.
Trading was relatively light in advance of Memorial Day, tending to skew prices. Nonetheless, the market's tone has improved considerably after weeks of selling amid investors' alarm over higher interest rates and rising oil prices.
The Dow finished up 159.19, or 1.6 percent, at 10,117.62. That was the blue chips' biggest advance since March 25.
Broader stock indicators also finished with robust gains. The S&P 500 index was up 17.64 or 1.6 percent at 1,113.05, its biggest gain since March 25, and the Nasdaq composite index was up 41.67 or 2.2 percent at 1,964.65, its best performance since April 28.
The price of the Treasury's 10-year note closed up 116 point, while its yield fell to 4.72 percent from 4.74 percent Tuesday. Two-year Treasury notes were unchanged and yielded 2.53 percent.
Yesterday's advance was less about a single news item, then a reflection of gradually changing sentiment, analysts said.
"I don't see any of those events today as being market movers," said Hugh Johnson, chief investment officer at First Albany Corp.
"The message of the market is that it's starting to look as though conditions are starting to get stable ... and I think that's giving us a lot of relief," he said.
John P. Waterman, chief investment officer at Rittenhouse Asset Management, said investors were beginning to move beyond the concerns about oil prices as well as tightening interest rates.
"At some point, the people who want to sell are done selling," Waterman said. "Then the ones who are believers, who have hung in there, step in."
Those who needed encouragement might have found it yesterday in the price of July oil futures, which fell 58 cents to close at $41.14 a barrel in Nymex trading.
In a slow week for economic and corporate news ahead of the holiday, the market reacted positively to the consumer confidence report. The Conference Board said its Consumer Confidence Index for May edged up to 93.2 from a revised 93 reading in April.
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