US stocks ended a back-and-forth session with a modest advance today as a sharp drop in oil prices helped counter renewed concerns about the strength of the economy.
Oil fell nearly $5 a barrel after China announced plans to raise prices of petrol and diesel fuel prices, a move that could ease global demand.
The pullback in oil was welcome after weeks in which rising prices have pinned down investor sentiment with fears that the run-up would force businesses and consumers to curb spending.
But worrisome comments from Citigroup perhaps damped some investors’ spirits.
The bank warned that a “substantial” amount of write-downs on bad debt were still to come. The comments from Citi’s chief financial officer, Gary Crittenden, sent Citigroup shares lower and at times weighed on the financial sector. Citi was among the steepest decliners of the 30 stocks that make up the Dow Jones industrial average.
But while Citi’s comments about faltering debt renewed worries about credit markets, the drop in oil seemed to encourage some investors to buying stocks.
“It really seems to be a tug-of-war between the good news and the bad news, or the not-as-bad news and the terrible news,” said Jennifer Ellison, principal with wealth management firm Bingham, Osborn & Scarborough in San Francisco.
“I think it’s going to be hard for the market to find a trend when there is still this undercurrent of bad economic data and negativity in the financial sector and the high price of oil.”
The Dow rose 34.03, or 0.28%, to 12,063.09. The Dow traded below the 12,000 mark in Wednesday’s session for the first time since mid-March and sank below it again in trading today. But some investors appeared encouraged that the blue chips closed above that level both on Wednesday and today.
Broader stock measures also advanced. The Standard & Poor’s 500 index rose 5.02, or 0.38%, to 1,342.83, and the Nasdaq composite index jumped 32.36, or 1.33%, to 2,462.07.
Advancing issues narrowly outpaced decliners on the New York Stock Exchange, where volume totalled 1.29 billion shares compared with 1.28 billion shares traded on Wednesday.
Crude oil futures fell 4.75 to settle at 131.93 per barrel on the New York Mercantile Exchange after the Chinese disclosed plans to raise prices for petrol and diesel by 16% and 18%, respectively. The move could dampen demand.
Bond prices fell as stocks fluctuated. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 4.22% from 4.14% late Wednesday.
The dollar traded mixed against other major currencies, while gold prices rose.
Citigroup fell 23 cents to 20.17 after the company’s comments about the likelihood of further write-offs of bad debt.
Circuit City Stores posted a first-quarter loss that was wider than last year’s due to sinking sales at established stores. The electronics retailer also said it is suspending its dividend. The company’s per-share loss was slightly smaller than analysts expected, but its revenue was lower. Circuit City fell 7 cents to 3.98.
Hexion Specialty Chemicals said it did not think it would be able to acquire fellow chemicals maker Huntsman Corp because of the deterioration of Huntsman’s finances. Huntsman fell 8, or 38%, to 12.86.
The Russell 2000 index of smaller companies rose 7.12, or 0.97%, to 737.83.