US stocks rise as oil prices fall

Stocks edged higher atoday as another drop in oil prices helped Wall Street withstand the effects of a disappointing jobs creation report. The major indexes achieved a second straight week of gains.

Crude oil futures continued their decline, falling below the 43-per-barrel mark for the first time in 2.5 months. A barrel of light crude settled at 42.54, down 71 cents, on the New York Mercantile Exchange, raising hopes that a continued slide in oil prices would lift an economy weighed down by high energy costs.

Oil’s performance helped investors look past the jobs report. The Labour Department said there were 112,000 new jobs in November, far fewer than the 200,000 Wall Street expected. And October’s blockbuster gains of 330,000 were adjusted down to 307,000.

“Certainly, the jobs number was a surprise, but it’s still a positive,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. “It still demonstrates that our economy is moving forward and creating jobs. And oil’s been a nice boost this week as well.”

The Dow Jones industrial average gained 7.09, or 0.07%, to 10,592.21.

Broader stock indicators were narrowly higher. The Standard & Poor’s 500 index was up 0.84, or 0.07%, at 1,191.17, and the Nasdaq composite index gained up 4.39, or 0.2%, at 2,147.96.

While the economic news has been disappointing, Wall Street managed post gains for the week thanks to a 13% drop in crude oil futures over the past three sessions. For the week, the Dow gained 0.67%, the S&P 500 was up 0.72% and the Nadsaq rose 2.19%.

Jobs and oil have been Wall Street’s biggest concerns in the second half. With petrol and other energy prices unusually high, consumers have been less willing to spend, as seen by the sluggish start to the holiday shopping season. And without more spending, companies have been less willing to create new jobs, which would mean more consumers with disposable income.

However, investors remained bullish on stocks, with inflows of capital continuing to climb since the presidential election.

“It’s not really rational right now, because the fundamentals of the market don’t match up with the sentiment out there,” said Chris Johnson, manager of quantitative analysis at Schaeffer’s Investment Research in Cincinnati. “The cash that’s been poured into the market starting with the election has just been a buoying force. You’ve got an overbought market that’s going to remain overbought. “

Tech stocks gained traction after Intel’s bullish mid-quarter update. The semiconductor giant and Dow component said its revenues would be substantially higher than Wall Street expected. Intel surged 1.20, or 5.28%, to 23.91.

Other chip makers rode Intel’s coat tails and moved higher. Advanced Micro Devices was up 60 cents at 23.22, Texas Instruments gained 19 cents to 25.10 and National Semiconductor rose 15 cents to 16.20.

IBM added 1.32 to 97.08 after The New York Times reported that the Dow component is considering a sale of its personal computer business to Chinese computer maker Levono Group.

IBM could gain 1 billion to 2 billion in the transaction, according to the report.

A number of airlines reported an increase in business for November, as more people took to the skies during the Thanksgiving holiday. Among those reporting substantial increases in passenger miles, American Airlines parent AMR Corp slipped 13 cents to 10.50, Alaska Air Group was unchanged at 32.90 and America West Holdings was down 2 cents at 6.35.

Mandalay Resort Group climbed 50 cents to 70.19 after the hotel and casino giant reported earnings that beat Wall Street forecasts by 11 cents per share, fuelled by record-setting performances at each of the company’s Las Vegas Strip properties. The company is on track for an early 2005 merger with MGM Mirage, shares of which rose 2.84 to 63.54.

Advancing issues outnumbered decliners by nearly 3 to 2 on the New York Stock Exchange, where volume came to 1.57 billion shares, compared with 1.78 billion on Thursday.

The Russell 2000 index of smaller companies was down 0.30, or 0.05%, at 642.21.