Falling oil prices send stocks higher
NEW YORK – Wall Street rebounded Monday as energy prices fell on signs that Tropical Storm Ernesto won’t hit the Gulf of Mexico and as investors grew optimistic about a series of major economic reports on tap this week.
Retail and transportation stocks rose as investors believed lower oil prices would help consumer spending. The drop in energy prices also massaged concerns that this week’s data on consumer confidence, job growth, and manufacturing might show the economy is slowing faster than expected.
The market’s advance came amid light summer volume, which is expected to remain thin until after Labor Day.
The Standard & Poor’s 500 added 6.69, or 0.52 percent, to 1,301.78 – near a three-month high. Powering the index were components Altria Group Inc. and PepsiCo Inc., which touched on historic highs, and Coca-Cola Co. coming within pennies of a 52-week high.
Other major stock indicators also advanced. The Dow jumped 67.96, or 0.60 percent, to 11,352.01, recovering somewhat from last week’s loss of 0.86 percent. The Nasdaq composite index, also near a three-month high, picked up 20.41, or 0.95 percent, to 2,160.70.
Bonds were mostly flat, with the yield on the benchmark 10-year Treasury note at 4.80 percent from Friday’s five-month low of 4.79 percent. The dollar was mixed against other major currencies, while gold prices fell.
Energy prices retreated as it appeared Ernesto would likely swipe Florida instead of key oil and gas platforms in the Gulf of Mexico. A barrel of light, sweet crude tumbled $1.90 to $70.61 on the New York Mercantile Exchange. Meanwhile, gasoline futures fell by 11 cents to $1.78 a gallon and natural gas declined by 68 cents to $6.47 per 1,000 cubic feet.
The declines were welcomed by Wall Street after last week’s economic data showed a sharp drop in new and existing home sales. The data prompted concerns about the economy, and threw into question the Federal Reserve’s hope for a soft landing as a result of its string of 17 interest rate hikes.
Investors will be looking for clues as to the Fed’s next move from this week’s economic data, starting with the Conference Board’s consumer confidence report today.
Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange, where volume came to 1.08 billion, compared to 812.3 million traded at the same point Friday.
The Russell 2000 index of smaller companies added 7.41, or 1.06 percent, to 706.65.
Overseas, Japan’s Nikkei stock average lost 1.10 percent at the close. At the close, with London markets off for a holiday, Germany’s DAX index added 0.75 percent and France’s Cac-40 rose 0.73 percent.
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