Oil slide helps give stocks momentum
Wall Street rebounded in light post-holiday trading Tuesday as lower oil prices encouraged investors to add to their portfolios in the final days of the year.
Buyers came into the market after major indexes retreated last week with three straight down sessions. However, stocks were range-bound because of thin volume after the Christmas holiday and in the absence of major economic reports.
Oil’s slide lent support for the stock markets as investors brushed off concerns about Iran’s reaction to United Nation’s sanctions over its nuclear program. With crude hovering near $61 a barrel, the prospect of lower gasoline prices was seen propping up consumer spending.
That was welcome news for retailers after reports showed holiday shopping might have been weaker than expected. Stores had a late-buying surge in the final days before Christmas, but it wasn’t strong enough to meet holiday sales expectations.
Trading volume is expected to remain light this week as many investors are on vacation, which tends to skew price moves and make them appear more dramatic than they perhaps are. European stock markets remain closed for extended Christmas holidays, while stock prices in Tokyo hit a seven-month high.
“We’re seeing lower oil prices being a minor catalyst for the market,” said Joe Ranieri, managing director of equity trading for Canaccord Adams. “Other than that, you’re just seeing a quiet week with added volatility.”
The Dow Jones industrial average rose 64.41, or 0.52 percent, to 12,407.63.
Broader stock indicators were also higher. The Standard & Poor’s 500 index was up 6.14, or 0.44 percent, at 1,416.90, and the Nasdaq composite index was up 12.33, or 0.51 percent, at 2,413.51.
The advance helped boost the likelihood that all three indexes might finish the year with double-digit gains. The Dow is up 15.8 percent in 2006, the S&P has risen 13.5 percent, and the Nasdaq is up 9.4 percent.
Bonds were little changed, with the yield on the benchmark 10-year bond flat at 4.60 percent from Friday; there were more substantial gains in longer-term Treasuries.
The dollar was mixed against other major currencies, while gold prices rose in response to tensions over Iran.
Neil Massa, a trader with John Hancock Funds, said the market’s “moves are mostly energy based.” The price of a barrel of light sweet crude dropped $1.31 to $61.10 on the New York Mercantile Exchange amid mild winter weather that has depressed demand for home-heating fuels.
The Russell 2000 index of smaller companies was up 7.35, or 0.94 percent, at 788.17.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where consolidated volume came to 1.32 billion shares, compared to 2.72 billion at the same point on Friday. Overseas, Japan’s Nikkei stock average closed up 0.45 percent.