U.S. Stocks Remain Mostly Ahead On Crude's Fall
NEW YORK (MarketWatch) -- U.S. stocks on Friday ran mostly higher for a second day, getting a lift as bond insurers Ambac Financial Group Inc. and MBIA Inc. had their credit ratings affirmed, while crude oil's ongoing decline boosted hopes for higher consumer spending.
"We're not sure how long this trade can continue, as there is some fear the commodities complex is selling off because of a global economic slowdown," said Art Hogan, chief market strategist at Jefferies & Co. "But for now, we'll continue to celebrate cheaper oil and the stronger dollar."
After climbing nearly 100 points, the Dow Jones Industrial Average lately stood at 11,634.82, up 18.89 points, with 19 of its 30 components posting gains, recently led by Wal-Mart Stores Inc. and General Motors Corp. , both up more than 2%.
Chevron Corp. fronted declines among the blue chips, with shares of the oil giant down 1.9%.
The S&P 500 climbed 2.55 points to 1,295.48, with telecommunication services, health care and consumer discretionary fronting sector gains among the index's 10 industry groups.
Energy and materials stood out as the S&P's only declining sectors.
The technology-heavy Nasdaq Composite fell 2.85 points to 2,450.82.
On the New York Mercantile Exchange, oil for September delivery fell $2.56 to $112.45 a barrel. .
Light volume
Volume neared 639 million on the New York Stock Exchange, with advancing stocks outpacing those dropping roughly 8 to 7. On the Nasdaq, nearly 430 million shares traded, and advancers ran ahead of declining issues by 7 to 6.
Shares of J.C. Penney Co. gained more than 6% in the wake of the retailer's second-quarter results, which had profits falling 36%. .
"To a certain extent, we can't live on 'oil goes down/stocks go up' for the rest of our lives," said Hogan. "Some of the equities valuations have to do with earnings, with retailers during the last two days offering a mixed bag."
Shares of Ambac Financial and MBIA gained after Standard & Poor's Ratings Services late Thursday affirmed AA financial-strength ratings for both bond insurers. .
Not all financial shares gained, with Wachovia Corp. among those under pressure.
Shares of the Charlotte, N.C.-based bank were off nearly 1% after state and federal regulators said Wachovia had agreement to a preliminary settlement under which the regional bank would offer to buy as much as $9 billion of auction-rate securities. .
In other corporate news, Waste Management Inc. said it would review its options after Republic Services Inc.'s board of directors rejected its sweetened takeover offer. Republic previously announced that it would seek to acquire Allied Waste Industries Inc. .
Early economic data mostly offered support for equities' early climb. The New York Federal Reserve Bank reported that a measure of manufacturing activity in the state improved slightly in early August, while the Federal Reserve said U.S. factory output climbed 0.4% in July.
Less positive was the University of Michigan's index of consumer sentiment, which climbed slightly in August to 61.7.
"We expect the further drop in energy prices in early August to further boost sentiment, though sentiment remains at weak 'recessionary' levels that are at odds with continued modest growth in the economy," said analysts at Action Economics.
The dollar continued its rapid ascent over the past week, first triggered by the European Central Bank admitting the weak state of the euro-zone economy. Data released Thursday showed the 15-nation euro zone posting its first-ever quarterly contraction, and fresh evidence of the soft global economy came Friday as Hong Kong's economy grew a slower-than-forecast 4.2% in the second quarter.
"The euro continued to fall against the dollar amid speculation that U.S. consumer confidence is rising and consumer spending will keep the economy ou of recession," said Randall Lacayo, currency analyst at Wachovia Corp. "The collapse of crude is also driving the euro lower."
Metals futures were also pounded, with gold dropping below the key $800-an-ounce level. .
The dollar was stronger against the Japanese yen. Goldman Sachs declared that the dollar has bottomed, citing the overseas weakness, "a clear technical break in many dollar crosses" and much lower oil prices.
Overseas, the Nikkei 225 ended 0.5% higher in Tokyo. The FTSE 100 traded 0.6% lower in London after initial gains.
On Thursday, U.S. stock indexes closed higher, snapping a two-day losing run as investors looked beyond a larger-than-expected rise in consumer prices in July to focus on crude's recent decline.
By Kate Gibson