Wall Street bounded higher for the second straight day today as investors revelled in sharply falling oil prices and the pro-business agenda of the second Bush administration.
The Dow Jones industrials gained more than 177 points for its best day of 2004, while the S&P 500 closed at its highest level since early 2002.
Oil prices tumbled below the 49 per barrel mark, giving investors hope that crude, which climbed steadily through October, could be stabilising. A barrel of light crude was quoted at 48.82, down 2.06, on the New York Mercantile Exchange – the lowest settlement price since September 29.
“I think oil has a lot to do with it,” said Michael Palazzi, managing director of equity trading at SG Cowen Securities. “There are some technicals here that have come through as well, but oil is a huge part of this rally.”
The Dow Jones industrial average rose 177.71, or 1.75%, to 10,314.76, adding to a 101-point gain on Wednesday. It was the biggest one-day point gain for the Dow since October 1, 2003, and its best close since September 14.
Broader stock indicators were strongly higher. The Standard & Poor’s 500 index was up 18.47, or 1.62%, at 1,161.67, its highest closing level since March 19, 2002.
The Nasdaq composite index gained 19.30, or 0.96%, to 2,023.63, its highest close since June 30.
The Dow has posted gains in seven of the last eight sessions, climbing 5.79% since October 25.
The Nasdaq gained 5.73% and the S&P 500 climbed 6.11% over the same time period, and both indexes enjoyed their eighth positive session in a row.
Whether the rally will continue will probably depend on whether tomorrow’s job creation report from the Labour Department shows strong employment gains. The Federal Reserve meeting next Wednesday – which will probably result in a quarter percentage point hike in interest rates – is also expected to move the market.
“I think there’s a potential here to break out of the gentle downward trend we’ve seen since April,” said Rod Smyth, chief investment strategist at Wachovia Securities. ”We’re now back to the issues that are more likely to dominate, which is Fed policy and oil prices and prospects for inflation, those kind of things.”
In perhaps a positive precursor to tomorrow’s jobs report, the Labour Department said first-time unemployment claims fell to 332,000 last week, down 19,000 from the previous week – a better showing than Wall Street had expected.
However, the nation’s productivity rose by only 1.9% in the third quarter, the smallest gain since late 2002 and far less than the brisk 3.9% pace in the second quarter, according to the Labour Department.
Investors welcomed moderate gains in October retail sales, though bellwether Wal-Mart Stores posted only a 2.8% gain in stores open at least a year. Retail analysts were expecting a 3% gain.
Wal-Mart nonetheless rose 1.78 to 56.26.
Cell phone equipment maker Qualcomm tumbled 1.80 to 38.07 as the company issued a lower profit outlook for the upcoming fiscal year. Qualcomm saw a 35% jump in profits for its fourth quarter, meeting analysts’ expectations.
Qwest Communications International swung to a loss in the third quarter due to lower revenues and one-time charges. Even without the charges, Qwest missed Wall Street forecasts by a penny per share. Qwest climbed 17 cents to 3.58.
A 3.5 billion (-2.72 billion) writedown in assets pushed long-distance carrier MCI into a loss, although without the charge, the company would have posted a profit of 16 cents per share, beating Wall Street estimates of 5 cents per share. A drop in quarterly revenue was offset by a larger drop in operating costs. MCI was up 51 cents at 17.76.
Drug store chain CVS climbed 2.52 to 46.90 as the company beat analysts’ profit forecasts by 3 cents per share. The company reported lower profits from a year ago as it absorbed the acquisition of rival Eckerd’s drug stores and its mail order pharmacy business.
Advancing issues outnumbered decliners by nearly 3 to 1 on the New York Stock Exchange, where volume totalled 1.78 billion shares, compared with 1.77 billion on Wednesday.
The Russell 2000 index of smaller companies was up 6.80, or 1.14%, at 602.13.