Stocks Mixed on Oil Prices, Economic Data
NEW YORK – Stocks turned mixed Friday as investors weighed soaring oil prices and a rising trade deficit against a jump in consumer confidence. The quarterly expiration of stock index options and futures pressured the Nasdaq composite index.
After a strong start, Wall Street gave up some of its gains as crude oil futures surged to $58 per barrel, before dropping to $57.80, up $1.22, at midday on the New York Mercantile Exchange. Concerns about heating oil supplies for the winter sent futures soaring, with oil for October delivery climbing past $59 per barrel.
Some analysts said rising oil prices weren’t cause for alarm, as higher energy costs haven’t yet made a dent in corporate profits.
“Companies can make money, and plenty of it, with oil at these levels,” said Scott Wren, senior equity strategist at A.G. Edwards & Sons. “We’ve had oil near these levels for nearly two quarters and companies have continued to knock the ball out of the park, beating consensus earnings estimates.”
At midday, the Dow Jones industrial average rose 30.15, or 0.29 percent, to 10,608.80.
Broader stock indicators were mixed. The Standard & Poor’s 500 index was up 3.61, or 0.30 percent, at 1,214.57, and the Nasdaq composite index, which fluctuated in the early going, fell 2.07, or 0.1 percent, to 2,087.08
Bonds were unchanged, with the yield on the 10-year Treasury note at 4.07 percent, even with the yield late Thursday. The U.S. dollar fell against other major currencies in European trading. Gold prices rose, heading for their fourth weekly gain.
The University of Michigan’s consumer sentiment index, a widely watched barometer of consumers’ confidence in the economy, came in at 94.8, a much higher reading than the 88.8 Wall Street expected.
And the Commerce Department released its measure of the first-quarter current account deficit. The broadest measure of foreign trade, which hit a record, grew 33 percent from a year ago, rising to $195.1 billion.
It was a “triple witching day” on Wall Street, in which investors cash in quarterly options and futures contracts and buy new ones, which likely accounted for some of the rise in stock prices. Increased volatility and widely varying stock prices often accompany such days.
Volume was extraordinarily high, with the New York Stock Exchange posting record volume between 9:30 and 10:30 a.m. By midday, 1 billion shares changed hands, versus 576.14 million shares at the same point Thursday, another result of triple witching.
Bank of America Corp. said it reached a $3 billion deal to buy a 9 percent stake in China Construction Bank. The deal would be the largest single purchase of stock in a Chinese bank by a foreign financial institution. Bank of America added 9 cents to $46.52.
Morgan Stanley is reassessing its plan to spin off its Discover unit, according to a report in the Wall Street Journal. The card generates just under a fifth of the company’s pretax net income. The stock edged down 31 cents to $51.59.
Adobe Systems Inc. reported better-than expected second-quarter results after regular trading Thursday, but analysts were disappointed with what they saw as conservative forecasts from the company, which dropped $1.66 to $30.75.
Electronics retailer Circuit City Stores Inc. was down 64 cents at $17.01 after the company reported a wider-than expected first-quarter loss.
Advancing issues outnumbered decliners by more than 9 to 6 on the New York Stock Exchange.
The Russell 2000 index of smaller companies was down 1.55, or 0.24 percent, at 642.48.
Overseas, Japan’s Nikkei stock average closed 0.86 percent higher. Britain’s FTSE 100 was up 0.65 percent, Germany’s DAX index was up 0.54 percent, and France’s CAC-40 was up .85 percent. —
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