NEW YORK (CNN/Money) -
U.S. blue-chip stocks rallied Wednesday, fueled by a drop in crude oil prices one day ahead of a key OPEC meeting.
The Dow Jones industrial average (up 60.32 to 10262.97, Charts) gained 0.6 percent and the Standard & Poor's 500 (up 3.79 to 1124.99, Charts) gained 0.3 percent.
The Nasdaq composite (down 1.79 to 1988.98, Charts) closed little changed, having tumbled in the morning.
Crude oil for July delivery tumbled $2.45 to close at $39.88 a barrel on the New York Mercantile Exchange, backing off from the all-time highs it hit in the early morning. On Thursday, OPEC ministers will meet to discuss prices and production in Beirut.
"I think over the last week or so, a lot of the negative news that has been bothering the market for some time has been priced in," said John Hughes, a market analyst at Shields & Co. "So when you have a day like today, when you get a drop in the price of oil, some people are willing to get back in."
Oil prices surged Tuesday and early Wednesday in response to weekend violence in Saudi Arabia, which propelled light crude futures to a record high of $42.45 early Wednesday, with investors fearing that the activity could hurt oil production in the world's biggest oil-exporting nation.
But prices eased Wednesday, as ministers from Kuwait and other OPEC-member nations vowed to push for an output boost at Thursday's meeting.
In morning trade, the United Arab Emirates said it will boost output by 400,000 barrels a day in June. In the afternoon, the minister from Kuwait said OPEC is likely to boost official output limits by 2.5 million barrels a day when it meets Thursday, which would be at the high end of its previous forecast.
Stocks recovered from the morning doldrums in tune with the drop in the price of oil.
Stock investors have been eyeing rising oil prices closely in recent months, worrying that higher oil and gasoline prices could hurt consumer spending and the broader economic recovery.
"I think any news out of OPEC tomorrow is likely to provide more of a psychological boost than anything else," said Mark Bryant, senior vice president at Brean Murray & Co., adding that overall, the week is likely to be pretty quiet.
"A lot of people are still on vacation right now, the summer doldrums have kicked in, and everyone is waiting on Friday's payrolls number," Bryant said. "There's just not going to be much liquidity until then."
The week's biggest market catalyst is likely Friday's payrolls report.
The jobs report is due before the market opens Friday. Economists surveyed by Briefing.com expect employers to have added 216,000 jobs in May, after adding 288,000 in April.
Such a strong number would confirm that the labor market is truly in recovery and would likely also confirm that the Federal Reserve will boost interest rates when it meets at the end of June.
Ahead of that, Thursday brings the weekly jobs report, as well as monthly reports on factory orders and the services sector of the economy. A mid-quarter update is due from Intel after the close Thursday.
What moved?
Wal-Mart Stores (WMT: up $0.91 to $56.35, Research, Estimates), Walt Disney, Coca-Cola and Boeing (BA: up $0.87 to $46.75, Research, Estimates) were the Dow's biggest gainers.
Boeing's gains came after Air New Zealand said it will spend more than $851 million for 10 of the company's aircraft.
Dow component Home Depot (HD: down $0.09 to $35.67, Research, Estimates) closed modestly lower, recovering from a bigger loss earlier after Bank of America Securities downgraded it to "neutral" from "buy," citing a lack of a catalyst to raise its target price.
The research report also noted that foot traffic has been slowing, and Home Depot has recently become more dependent on high-ticket items.
The tech-fueled Nasdaq was limited by weakness in select issues, particularly chip and chip gear makers, with leaders Intel (INTC: down $0.32 to $28.01, Research, Estimates) and Applied Materials both posting declines.
A few of the smaller issues in the sector also fell after forecasting sales growth in line but not above estimates for the latest quarter.
Xilinx (XLNX: down $1.12 to $35.23, Research, Estimates) said it expects growth of 5 to 8 percent versus analysts' forecasts of growth of 7 percent. Fairchild Semiconductor (FCS: down $1.37 to $18.13, Research, Estimates) said it is currently on track to meet its sales target but that it could be at risk to miss it because of volatility in its backlog.
Seagate Technology (STX: down $0.47 to $12.21, Research, Estimates) and Hutchinson Technology (HTCH: down $1.30 to $25.14, Research, Estimates) weakened after Merrill Lynch cut estimates on those two and other disk drive stocks, saying that it's too early to invest in the sector. After the close Wednesday, Seagate issued a quarterly update, saying it is seeing normal seasonal demand patterns.
On the New York Stock Exchange, Nortel Networks (NT: down $0.25 to $3.83, Research, Estimates) was the most active, losing more than 6 percent, after the telecom gear maker said that it could not yet give a date for when it would issue restated results for the last three years. The company had previously announced that it would restate the results in conjunction with an accounting scandal.
Rising nearly 45 percent in active Nasdaq trade was biotech Allos Therapeutics (ALTH: up $0.87 to $2.82, Research, Estimates), which said it received conditional regulatory approval for its experimental cancer drug.
Investors seem to take in stride strong May sales from automakers General Motors (GM: up $0.36 to $45.38, Research, Estimates) and DaimlerChrysler (DCX: up $0.32 to $44.59, Research, Estimates) and weaker results from Ford Motor (F: down $0.15 to $14.89, Research, Estimates).
Market breadth was positive. On the NYSE, advancers beat decliners by about three to two as 1.25 billion shares changed hands. On the Nasdaq, winners edged losers as 1.51 billion shares traded.
Treasury prices fell. The 10-year note lost 10/32 of a point in price, pushing its yield up to 4.74 percent from 4.70 percent late Tuesday. Bond prices and yields move in opposite directions.
The dollar was weaker versus the yen and higher versus the euro. COMEX gold fell $3 to settle at $392.50 an ounce.
In international trading, Asian markets ended mostly lower, while European markets closed with gains.
|
