Advertisement
YOU ARE HERE: LAT HomeCollections

Stocks gain as oil continues record run

May 09, 2008|Madlen Read | The Associated Press

Wall Street closed a quiet session with a moderate advance Thursday, with energy and other commodities companies leading the market as oil prices extended their record-breaking run.

The price of crude oil swept past $124 a barrel in late New York Mercantile Exchange trading, while gasoline rose to a new record of its own at the pump, climbing to a national average of nearly $3.65 a gallon.

Though the rising price of oil ignited concerns about inflation Wednesday, knocking the Dow Jones industrial average down more than 200 points, stocks held on to their gains even as oil rose Thursday.

Some of the big gainers were the companies that would benefit the most from higher commodities prices -- the oil companies and the metals producers like Alcoa -- and they helped lift the major indexes.

Stocks also rose after retailers issued April sales results that, although not strong overall, were less gloomy than expected. The data suggested that high energy costs leading consumers to alter their spending, and Wal-Mart Stores was one of the beneficiaries of that trend. But some apparel stores -- whose merchandise falls into the category of discretionary items -- again saw depressed sales as consumers budgeted more for gasoline and food.

Financial stocks were the worst performers of the day. Philip S. Dow, managing director of equity strategy at RBC Dain Rauscher in Minneapolis, said investors are most likely jittery over the sector, with continued concern about whether the companies have problems on their books beyond subprime mortgages.

"Our guess is that the worst is not over for the financials on a fundamentals basis," he said.

The Dow rose 52.43 points, or 0.4%, to 12,866.78.

Broader stock indicators turned higher, too. The Standard & Poor's 500 index rose 5.11 points, or 0.4%, to 1,397.68, and the Nasdaq composite index rose 12.75 points, or 0.5%, to 2,451.24.

Bond prices rose as some investors sought the safety of government debt despite the gains in stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.78% in late trading from 3.88% late Wednesday.

Gold prices rose $11 to $880.60 on the New York Mercantile Exchange. The dollar declined against most other major global currencies, though the euro was unchanged at $1.540 to the dollar.

Mixed economic readings and lofty energy prices could keep the market in a holding pattern through the summer, said Janna Sampson, director of portfolio management at Oakbrook Investments.

"With oil high and continuing to go up, it's going to be tough to get the market to have a sustainable rally," Sampson said.

Alfred E. Goldman, chief market strategist at Wachovia Securities, was a bit more optimistic, saying the economy is about four months away from the end of an average-length recession, so the stock market should climb again soon.

"Basically, the market is taking a time-out after the prior six weeks," Goldman said.

In a positive sign for the U.S. employment picture, which has seen four straight months of jobs losses, the Labor Department said Thursday the number of newly laid off workers seeking unemployment benefits dropped by 18,000 last week to 365,000 -- a larger decline than expected.

Aluminum producer Alcoa rose $1.56, or 4.1%, to $39.65. Oil companies also gained; Exxon Mobil rose $1.11 to $89.93, while Chevron was up $2.16 to $97.44.

Wal-Mart rose 33 cents to $57.16, but Target fell $1.10 to $52.34 after saying its same-store sales gain in April was smaller than analysts forecast. Same-store sales are an important barometer of a retailer's health that reflects sales at stores open at least a year.

The Russell 2,000 index rose 3.34 points, or 0.5%, to 719.55.

The European Central Bank left its interest rates unchanged Thursday. ECB President Jean-Claude Trichet pointed to clear upside risks to price stability, indicating that the bank is unlikely to lower its rates in the near future.

Advertisement
Los Angeles Times Articles
|
|
|