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Stocks turn higher as crude oil tops US$100 a barrel
Source: Agencies |
May 26, 2011, Thursday
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STOCKS turned higher yesterday, reversing earlier losses, as rising oil prices offset worries about the global economic recovery.
Europe's worsening debt crisis and weak Japanese exports raised concerns that the world's major economies were flagging. Oil jumped above US$100 per barrel, helping to turn energy stocks higher.
Energy companies in the S&P 500 rose 1.4 percent. Cabot Oil and Gas Corp. led the S&P 500 higher, rising 6 percent. Higher prices for other commodities including copper and silver helped send material company stocks higher. Freeport-McMoRan Copper & Gold Inc. rose 2 percent.
The Dow Jones industrial average rose 38 points, or 0.3 percent, to 12,394, in midday trading. The Standard & Poor's 500 index rose 4, or 0.3 percent, to 1,320. The Nasdaq composite rose 16, or 0.6 percent, to 2,761.
Greece's government and opposition party failed late Tuesday to reach consensus on how to control the country's debt troubles, adding to the uncertainty around Greece's financial future. Many analysts believe Greece will eventually have to restructure its debt, but it's unclear what form that would take.
If Greece defaults on its debt it could have a domino effect, denting the credit-worthiness of larger European economies and hampering the world economy.
Japan's government reported that the country's exports fell by 12.5 percent in April after the March 11 earthquake and tsunami shuttered factories and forced manufacturers to stop production. Japan's auto shipments were particularly hurt, falling by 67 percent. The report added to concerns that the global economy is a long way from returning to health.
The drop in Japanese exports affected orders for long-lasting goods in the U.S. Companies ordered fewer computers, heavy machines, cars and airplanes from factories in April. The 3.8 percent drop was the biggest in 6 months, reflecting a decline in U.S. business investment.
Stocks had been on a steady climb since last August before dropping steeply in March after the Japanese catastrophe shocked global financial markets. Encouraging corporate earnings sent stocks back up in April, but markets have stalled in the past three weeks. The S&P 500 closed at 1,363 on April 29, its highest level of the year, and has drifted lower ever since.
The price of safe haven assets like gold and 10-year U.S. Treasurys has risen as traders avoid a stock market they see as volatile. The S&P 500 index has closed higher on only three of the last 10 days.
Some analysts say the market may have been rising too far, too fast since the beginning of the year, making stocks seem expensive. The Dow is still up 7 percent for the year. The S&P 500 is up 5 percent.
"A pullback in the market is probably healthy," said Michael Sansoterra, portfolio manager at Silvant Capital Management.
Fertilizer company CF Industries rose 4 percent a day after a JPMorgan upgraded the stock, citing the company's good cash flow and positive predictions for the agriculture industry.
Martha Stewart Living Omnimedia jumped 19 percent after announcing that it had hired the Blackstone Group to explore a sale of the company.
Retail stocks are struggling. Polo Ralph Lauren Corp. sank 7 percent after reporting its profit fell 36 percent because of higher costs. Discount retailer Costco Wholesale Corp. slipped 1 percent after reporting earnings that missed analysts' estimates.
American International Group Inc. fell 4 percent to US$28.39 as the U.S. Treasury Department sold some of its stake in the company. Treasury said it would sell 300 million AIG shares for US$29 each, hoping to eke out a small profit. The price was set late Tuesday at the low end of the government's projected range.
Europe's worsening debt crisis and weak Japanese exports raised concerns that the world's major economies were flagging. Oil jumped above US$100 per barrel, helping to turn energy stocks higher.
Energy companies in the S&P 500 rose 1.4 percent. Cabot Oil and Gas Corp. led the S&P 500 higher, rising 6 percent. Higher prices for other commodities including copper and silver helped send material company stocks higher. Freeport-McMoRan Copper & Gold Inc. rose 2 percent.
The Dow Jones industrial average rose 38 points, or 0.3 percent, to 12,394, in midday trading. The Standard & Poor's 500 index rose 4, or 0.3 percent, to 1,320. The Nasdaq composite rose 16, or 0.6 percent, to 2,761.
Greece's government and opposition party failed late Tuesday to reach consensus on how to control the country's debt troubles, adding to the uncertainty around Greece's financial future. Many analysts believe Greece will eventually have to restructure its debt, but it's unclear what form that would take.
If Greece defaults on its debt it could have a domino effect, denting the credit-worthiness of larger European economies and hampering the world economy.
Japan's government reported that the country's exports fell by 12.5 percent in April after the March 11 earthquake and tsunami shuttered factories and forced manufacturers to stop production. Japan's auto shipments were particularly hurt, falling by 67 percent. The report added to concerns that the global economy is a long way from returning to health.
The drop in Japanese exports affected orders for long-lasting goods in the U.S. Companies ordered fewer computers, heavy machines, cars and airplanes from factories in April. The 3.8 percent drop was the biggest in 6 months, reflecting a decline in U.S. business investment.
Stocks had been on a steady climb since last August before dropping steeply in March after the Japanese catastrophe shocked global financial markets. Encouraging corporate earnings sent stocks back up in April, but markets have stalled in the past three weeks. The S&P 500 closed at 1,363 on April 29, its highest level of the year, and has drifted lower ever since.
The price of safe haven assets like gold and 10-year U.S. Treasurys has risen as traders avoid a stock market they see as volatile. The S&P 500 index has closed higher on only three of the last 10 days.
Some analysts say the market may have been rising too far, too fast since the beginning of the year, making stocks seem expensive. The Dow is still up 7 percent for the year. The S&P 500 is up 5 percent.
"A pullback in the market is probably healthy," said Michael Sansoterra, portfolio manager at Silvant Capital Management.
Fertilizer company CF Industries rose 4 percent a day after a JPMorgan upgraded the stock, citing the company's good cash flow and positive predictions for the agriculture industry.
Martha Stewart Living Omnimedia jumped 19 percent after announcing that it had hired the Blackstone Group to explore a sale of the company.
Retail stocks are struggling. Polo Ralph Lauren Corp. sank 7 percent after reporting its profit fell 36 percent because of higher costs. Discount retailer Costco Wholesale Corp. slipped 1 percent after reporting earnings that missed analysts' estimates.
American International Group Inc. fell 4 percent to US$28.39 as the U.S. Treasury Department sold some of its stake in the company. Treasury said it would sell 300 million AIG shares for US$29 each, hoping to eke out a small profit. The price was set late Tuesday at the low end of the government's projected range.
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