MARKET REPORT : Bargain hunters raise Dow 135.16
Posted on Wednesday, July 23, 2008
NEW YORK — Wall Street shook off early doldrums and closed sharply higher Tuesday after another drop in oil prices encouraged investors to set aside financial sector worries and go bargain hunting across the market.
The Dow Jones industrial average rose 135. 16, or 1. 18 percent, to 11, 602. 50. The blue chip index rose 400 points last week, but ended Monday’s session slightly lower.
Stocks initially fell on uneasiness about the continuing impact of the housing market downturn and the credit crisis on financial company earnings. Disappointing results from American Express Co. and Wachovia Corp. fed those worries.
But a $ 3 drop in oil — which took crude’s decline in recent weeks to nearly $ 20 a barrel — persuaded some investors to wade back into equities.
Even Wachovia Corp., the nation’s fourth-largest bank, shot 27 percent higher after its stock tumbled to levels not seen since the early 1990 s. The stock was pummeled after the retail bank posted an $ 8. 9 billion loss because of charges and reserves for bad mortgage loans.
The focus on higher oil’s impact on the economy has been so intense that any notch lower breeds optimism that the commodities bubble might perhaps be nearing an end, analysts said. That means, for the moment, corporate earnings reports have lost some of their dominance of the market.
The market was looking at the long-term impact of somewhat cheaper energy — and likely betting that company earnings would pick up if oil extends its decline.
“There’s been so many people speculating about oil taking off and how to handle it, the whole economy has been focused on it,” said Todd Leone, managing director of equity trading at Cowen & Co. “Just the fact that it has dropped — a big move down — helps out. There’s the perception that this will get the economy going again.” Broader indexes also rose Tuesday. The Standard & Poor’s 500 index jumped 17. 00, or 1. 35 percent, to 1, 277. 00. The technology-dominated Nasdaq composite index, which was down for much of the session on tech earnings disappointments, ended up 24. 43, or 1. 07 percent, at 2, 303. 96.
The Russell 2000 index of smaller companies rose 19. 19, or 2. 75 percent, to 716. 82.
Advancing issues outpaced decliners by ratio of more than 2-to-1 on the New York Stock Exchange, where about 1. 57 billion shares changed hands compared with about 1. 2 billion shares traded Monday.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 4. 10 percent from 4. 04 percent late Monday.
A barrel of light sweet crude tumbled $ 3. 09 to settle at $ 127. 95 on the New York Mercantile Exchange, down nearly $ 20 from its record high of $ 147. 27, reached just weeks ago.
Japan’s Nikkei stock average rose 2. 98 percent. Britain’s FTSE 100 fell 0. 74 percent, Germany’s DAX index rose 0. 28 percent, and France’s CAC-40 edged up less than 0. 01 percent.
FEEDBACK:
Something to say about this topic? Submit a Letter to the Editor online
