Investors Buy Stocks As Oil Price Drops
Posted on: Tuesday, 13 May 2008, 06:00 CDT
By Matt Krantz
The market's recovery remained alive Monday after a fall in the price of crude oil cooled one of investors' big fears.
The price of a barrel of oil fell $1.73 to $124.23, giving an excuse to buy stocks. The Dow Jones industrial average rose 130.43 points to 12,876.31. The Dow is still down 2.9% this year.
Helped by gains in stocks in the aluminum, construction materials, and refining and marketing industries, the benchmark Standard & Poor's 500 index rose 15.30 points to 1403.58. The S&P 500 is down 4.4% this year.
The tech-heavy Nasdaq also had a strong day, rising 42.97 points to 2488.49. That narrows the index's loss this year to 6.2%.
Oil prices have quickly replaced subprime loans as investors' primary concern, says Joseph Saluzzi, trader at Themis Trading. So even a slight decline in the price of crude gives stocks a vote of confidence, he says.
Investors were also encouraged by news Hewlett-Packard is in talks to buy technology outsourcing firm Electronic Data Systems, he says (story, 2B). "Anything that shows the smart money is buying assets is a good sign," Saluzzi says.
Still, investors such as Jennifer Ellison of Bingham Osborn & Scarborough are skeptical of the market's sudden strength that started in April. "We're probably not through this yet," she says.
Highlights: EDS gained $5.27, or 28%, to $24.13 on reports, which HP later confirmed, that it is considering being acquired by HP.
*Research In Motion, maker of the BlackBerry cellphone, gained $9.20 to $141.97. The company unveiled a new handset called the Bold, thought to be more advanced in some aspects than Apple's iPhone. (Technolgy Live, 3B.)
*Energy explorer Apache lost $1.62 to $134.05, falling along with other energy-related stocks because of the decline in the price of oil.
*Sprint Nextel fell 14 cents, or 1.5%, to $9.24 after the wireless telecom carrier reported a quarterly loss of $505million, which was deeper than its $211million loss in the same quarter last year.
*U. S. Steel rose 91 cents to $171.78, continuing a year-long run in steel stocks as global demand for the metal remains strong (story, 3B). AK Steel, another steel producer, rose 49 cents to $69.19. Cleveland-Cliffs, which provides raw materials to the steel industry, rose 73 cents to $180.55. (c) Copyright 2008 USA TODAY, a division of Gannett Co. Inc.
Source: USA TODAY
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