Stocks rise despite soaring oil prices
Stocks rebounded Tuesday, with the Dow Jones industrial average rising solidly above 10,000 as investors, less anxious about volatile energy prices, focused instead on good corporate news.
Light crude for November delivery surged above the psychologically important $50 milestone early in the session, but backed off that record high after Saudi Arabia indicated it would raise its output if necessary. Nervous about rising energy costs, investors had turned to the safety of Treasury bonds lately, but with the third quarter drawing to a close and oil prices easing, they seemed ready to return to stocks — especially after several sessions of equity declines.
“All attention is definitely being paid to oil today, and the fact that it’s trading off its highs is definitely helping equities,” said Brian Williamson, an equity trader at The Boston Company Asset Management. “You can definitely make a correlation today between the bond market selling off … and the momentum in U.S. equities.”
The Dow Jones industrial average closed up 88.86, or 0.9 percent, at 10,077.40.
The broader gauges also posted gains. The Standard & Poor’s 500 index added 6.54, or 0.6 percent, to 1,110.06. The Nasdaq composite index added 9.99, or 0.5 percent, to 1,869.87.
Uncomfortably high oil prices have dogged the equity market for months, and the major indexes all posted steep declines over the last week amid mounting worries about rising business expenses and falling consumer spending. Analysts are largely upbeat about the market’s underlying fundamentals, but given all the uncertainties surrounding energy costs, the jobs picture, the upcoming presidential election and persistent terror fears, few were convinced the upward move would last.
“If this rally didn’t hold today, it wouldn’t surprise me at all. I just can’t imagine a lot of people getting really enthused right now, saying ‘Gee, oil is near $50 a barrel, confidence is down, let’s go buy some stocks,”’ said Scott Wren, equity strategist for A.G. Edwards & Sons. “But hopefully if they’re looking down the road, they’ll see there are some stocks that have sold off, so if you’re trying to position yourself for the next year, there are opportunities out there.”
Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange. Preliminary consolidated volume came to 1.80 billion shares traded, compared to 1.57 billion on Monday.
The Russell 2000 index, which tracks smaller company stocks, was up 7.30, or 1.3 percent, at 565.66.
Overseas, Japan’s Nikkei stock average fell 0.4 percent. In Europe, France’s CAC-40 added 0.3 percent, Britain’s FTSE 100 rose 0.6 percent and Germany’s DAX index gained 0.2 percent.