Stocks rise modestly as oil continues slide
NEW YORK -- Wall Street rose modestly today as the price of oil extended its decline, falling to the $111 a barrel level and helping to offset a disappointing report on consumer sentiment.
Oil fell on a growing sense that economies around the world are joining the U.S. in a slowdown. The rising dollar, which is gaining strength on economic concerns, contributed to the sell-off in crude and also in other commodities.
Light, sweet crude dropped $3.17 to $111.84 a barrel on the New York Mercantile Exchange and earlier traded as low as $111.34.
Oil's continuing slide, part of an overall decline in commodities prices, was welcome news to investors who have been concerned for months that record-high prices for energy would force consumers to keep cutting back their discretionary spending. Oil is down more than $35 from its July 11 record of $147.27; meanwhile, gold prices that swept past $1,000 an ounce earlier this year are now below $800.
"Commodities continue to fall off a cliff and the market likes it," said Greg Church, chief investment officer of Church Capital Management.
Still, there were signs that the consumer remains under pressure. The University of Michigan reported a slightly smaller-than-expected rise in consumer sentiment in early August compared with July. Moreover, earnings outlooks from retailers J.C. Penney Co. and Abercrombie & Fitch Co. on Friday came in below expectations.
In early afternoon trading, the Dow Jones industrial average rose 43.89, or 0.38 percent, to 11,659.82.
The Standard & Poor's 500 index rose 5.42, or 0.42 percent, to 1,298.35, while the Nasdaq composite index rose 4.33, or 0.18 percent, to 2,458.00.
Bonds rose modestly. The yield on the benchmark 10-year Treasury note, which moves opposite its price, slid to 3.84 percent from 3.90 percent late Thursday.
The dollar rose against other major currencies, contributing to the pullback in oil and other commodities.
Volume remained extremely light, exaggerating moves in the major indexes. On the New York Stock Exchange, 673.50 million shares exchanged hands.
The market extended an advance that began Thursday, ending two days of sharp declines. Lower oil prices along with bargain-hunting in the financial sector drove the stock market higher Thursday.
Financial stocks have been especially volatile recently, as investors remain wary that banks will report more credit losses as the housing market still suffers.
