Stocks rise with higher metal, oil prices
NEW YORK – Wall Street bounded higher Tuesday as investors still mindful of widening credit problems nonetheless went in search of bargain stocks. The Dow Jones industrial average rose 117 points, with soaring oil and precious metals prices driving up the companies that produce those commodities.
Investors remain haunted by the big debt problems at banks, notably Citigroup Inc. and Merrill Lynch & Co. But companies outside of the banking, lending and housing industries have been posting strong financial results – on Tuesday, Tenet Healthcare Corp., Nortel Networks Corp. and Archer Daniels Midland Co. impressed Wall Street with their quarterly earnings.
And with no major bad news to follow up Citigroup’s Sunday announcement that it was preparing to mark down another $8 billion to $11 billion of subprime debt, even bank stocks, pummeled in recent months, looked like bargains.
Citigroup fell, but JPMorgan Chase & Co., Bank of America Corp., Wachovia Corp., Wells Fargo and Washington Mutual Inc. – which all hit 52-week lows Monday – each jumped Tuesday.
The Dow rose 117.54 or 0.87 percent, to 13,660.94. The size of the gain masked the nervousness in the market; stocks were earlier in the session.
Broader stock indicators also turned higher. The Standard & Poor’s 500 index rose 18.10, or 1.20 percent, to 1,520.27, and the Nasdaq composite index rose 30.00, or 1.07 percent, to 2,825.18.
Government bonds dipped as money flowed back into stocks. The yield on the 10-year Treasury note, which moves opposite the price, rose to 4.37 percent from 4.34 percent late Monday. The yield rose to 4.38 percent in after-hours trading.
The Dow is about 500 points, about 3.5 percent, below the all-time high close of 14,164.53 it reached Oct. 9. Many companies, particularly in the technology and industrial sectors, have been consistently posting strong quarterly results, and appear undervalued. But third-quarter weakness in the financial sector – the biggest in the S&P 500 – has dragged down overall U.S. earnings growth.
The dollar reached yet another record low against the euro. The 13-nation currency rose to a high of $1.4569 before pulling back slightly.
Crude oil on the New York Mercantile Exchange briefly passed $97 a barrel for the first time, before settling up $2.72 at a record $96.70. Gold on the Nymex rose to another 27-year high, settling up $12.60 $823.40 an ounce.
One of the most active stocks on the NYSE Tuesday was silver and gold miner Coeur d’Alene Mines Corp., which shot higher on higher metals prices and a Bear Stearns analyst’s comment that the stock is underpriced. Shares climbed 52 cents, or 13.5 percent, to $4.36.
Overseas, Japan’s Nikkei stock average closed down 1.62 percent, while Hong Kong’s Hang Seng index rose 1.71 percent a day after falling 5 percent. Britain’s FTSE 100 rose 0.21 percent, Germany’s DAX index rose 0.25 percent, and France’s CAC-40 rose 0.44 percent.