Stocks higher as oil prices decline
Lower oil prices and technology news helped stocks rally Monday despite a legal dispute that raised questions about Johnson & Johnson’s $25 billion acquisition of Guidant Corp.
Investors had little information to guide them through the session, with few third-quarter earnings reports remaining and no major economic data scheduled this week. News that Microsoft Corp. is in talks to buy a stake in American Online Inc. and a deal involving TiVo Inc. and Yahoo Inc. drove gains in the tech sector.
The market found some comfort in the declining price of crude oil, which sank more than $1 a barrel as recent unusually warm weather quelled fears of a winter heating oil shortage, although the International Energy Agency reiterated concerns about capacity. A barrel of light crude lost $1.11 to settle at $59.47 on the New York Mercantile Exchange.
Bill Groenveld, head trader for vFinance Investments, said he found it surprising the market hasn’t withdrawn given the shortage of headlines, which is evidence that a bullish sentiment remains on Wall Street.
“Over the last six months, the market has been through trials and tribulations,” Groenveld said. “But it’s really coming through with flying colors considering everything it’s been up against.”
At the close of trading, the Dow Jones industrial average gained 55.47, or 0.53 percent, to 10,586.23, its highest close since Sept. 16.
Broader stock indicators were also higher. The Standard & Poor’s 500 index was up 2.67, or 0.22 percent, at 1,222.81, and the Nasdaq composite index advanced 8.81, or 0.41 percent, to 2,178.24.
Bonds rose after reaching eight-month lows last week, with the yield on the 10-year Treasury note sliding to 4.63 percent from 4.67 percent late Friday. The dollar gained ground against most major currencies, while gold prices inched upward.
Monday’s quiet trading session follows two straight weeks of sturdy gains as investors sifted through quarterly profit reports and mostly positive economic numbers for any indication of the market’s direction. Last week, the major indexes each added more than 1 percent.
But even as energy prices continue descending from record levels set in early September, that alone is not enough to boost stocks after the recent rallies, said Arthur Hogan, chief market analyst for Jefferies & Co.
“The three things we’ll digest this week are earnings and guidance for the fourth quarter, and the long-term forecast for energy prices,” Hogan said, adding that investors will also be watching how companies use stockpiles of cash that have built over the past year.
Advancing issues led decliners by about 9 to 4 on the New York Stock Exchange, where preliminary consolidated volume of 1.98 billion shares lagged the 2.05 billion shares traded on Friday.
The Russell 2000 index of smaller companies rose 3.08, or 0.47 percent, to 661.24.
Overseas, Japan’s Nikkei stock average fell 0.10 percent. Britain’s FTSE 100 gained 0.69 percent, Germany’s DAX index rose 0.58 percent, and France’s CAC-40 was higher by 0.11 percent.