Stocks rise sharply as oil plummets
Wall Street roared back Tuesday, propelling the Dow Jones industrials up 115 points as crude oil prices plunged more than $2 and consumer confidence surged to a three-year high.
Investors bought up stocks as crude oil, which had closed above $60 per barrel Monday for the first time, fell to $58 amid profit-taking following the recent runup in prices. Light crude settled at $58.20, down $2.34, on the New York Mercantile Exchange.
In addition, the Conference Board’s consumer confidence index rose to its highest level since 2002, and consumers’ optimism about the future also rose. That gave the market enough impetus to move higher, gaining back a little of last week’s oil-driven selling that sliced more than 325 points from the Dow.
“The selloff last week was a little much based on the underlying economic fundamentals,” said Scott Wren, equity strategist for A.G. Edwards & Sons. “Companies were able to make plenty of money over the last two quarters when oil was in the mid-$50s, and consumers will continue to spend money at these levels. It was just over done, and we’re getting some of it back now.”
The Dow rose 115.01, or 1.12 percent, to 10,405.79.
Broader stock indicators also moved sharply higher. The Standard & Poor’s 500 index was up 10.88, or 0.91 percent, at 1,201.57, and the Nasdaq composite index climbed 24.69, or 1.21 percent, to 2,069.89.
Bonds fell sharply after a long stretch of gains tied to concerns over oil. The yield on the 10-year Treasury note rose to 3.97 percent from 3.91 percent late Monday. The dollar reached an eight-month high against the Japanese yen and rose slightly against the euro. Gold prices fell.
The market’s upswing provided some stability going into Thursday, when the Federal Reserve will release its decision on interest rates less than two hours before the market closes and the second quarter ends. Investors hope the Fed will shed light on how long rates will continue to rise, as well as the impact of oil on the economy.
“It’s good to see the dollar rise. It’s good to see oil come down. And it’s good to see consumer confidence numbers like this,” said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. “But we still have problems out there that need to be addressed, starting with the Fed. So while we have a nice move higher, it likely won’t last that long.”
Advancing issues outnumbered decliners by nearly 5 to 2 on the New York Stock Exchange, where volume came to 1.368 billion shares, compared with 1.366 billion traded on Monday.
The Russell 2000 index of smaller companies was up 13.17, or 2.1 percent, at 641.48.
Overseas, Japan’s Nikkei stock average rose 0.87 percent. In Europe, Britain’s FTSE 100 closed up 0.93 percent, France’s CAC-40 climbed 0.88 percent for the session, and Germany’s DAX index gained 0.74 percent.