Falling Commodity Prices Spark Stock Rally
Stocks advanced broadly Thursday as a big drop in oil and other commodity prices bolstered a tame inflation outlook in the bond market, where interest rates sank to their lowest level since April.
The Dow Jones industrial average rose 36.15 to 6,029.38, pushing back above the 6,000-mark. Broader stock measures posted their best gains in weeks, led by technology, financial and health care issues.
In the morning, investors were treated to more indications of a moderating economy that may keep inflation and interest rates from rising.
Bonds took off after oil futures prices began sliding on speculation that Iraqi crude might return to the market following a peace agreement among Kurdish factions in northern Iraq. In other futures trading, meanwhile, soybean and wheat contracts also fell, sending the Commodity Research Bureau’s index of 17 commodities to its lowest point in a year.
The CRB index “is a barometer that many people look to on inflation, and the bond market has responded very positively,” said A. Marshall Acuff Jr., market strategist at Smith Barney.
Advancing issues outnumbered decliners by a 3-to-2 margin on the New York Stock Exchange, where volume totaled 487.82 million shares as of 4 p.m., up from 437.78 million Wednesday.
Some of the stocks that moved substantially or traded heavily Thursday:
NYSE
Gap, up 1-1/4 at 28-7/8.
The San Francisco-based clothing retailer plans to buy back up to 30 million of its about 280.8 million common shares in the open market over the next three years.
Royal Dutch-Shell Group, down 3-3/8 at 165-3/8.
The company’s third-quarter profits jumped 26 percent, but analysts played down the benefits of higher oil prices, noting that profits from refining and selling oil products fell by 27 percent.
NASDAQ
Odwalla, down 6-1/4 at 12-1/8.
The juice maker recalled 13 products made with a batch of unpasteurized apple juice linked to an outbreak of E. coli bacterial poisoning.
Netscape Communications, down 1-7/8 at 44-1/4.
The Internet software maker is planning another public stock offering that would raise $96 million for the company.
Starbucks, down 2-1/2 at 32-1/2.
The Seattle-based coffee retailer reported that its sales at stores open at least a year, a key industry standard, rose 5 percent for the four weeks ended Oct. 27.
General Acceptance, down 2-1/4 at 3-1/4.
The consumer financing company posted an unexpected third-quarter loss, which it blamed on a decision to auction off part of its inventory of repossessed vehicles instead of selling them at retail prices.