US stocks recover after volatile week

Wall Steet ended a volatile week with a big advance today as oil prices tumbled below US$50 (€38.84) per barrel and jittery investors took solace in a pair of economic reports that eased their inflation concerns.

The Dow Jones industrial average gained 122 points for the session, but the major indexes suffered losses for the week.

A late sell-off in crude futures helped Wall Street solidify its gains in an otherwise uncertain session.

A barrel of light crude settled at US$49.72 (€38.62), down US$2.05 (€1.59), on the New York Mercantile Exchange, its lowest level since Feb. 18. Oil prices began the week above US$55 (€42.73) per barrel.

The buying was further buoyed by economic data that showed prices and labour costs remained in check.

The Commerce Department reported a 0.5% increase in income and a 0.6% hike in spending for March, and the Labour Department said labour costs for businesses were falling. Both are key inflation readings which bode well for interest rates and the economy.

“I think it’s well recognised that oil is one of the risk factors in the economic picture, and this drop is helping the market,” said Richard Rippe, chief economist for the Prudential Equity Group.

“A decline is both beneficial to the inflation outlook and prospects for demand and growth. Oil prices are still high, no mistaking that. But it helps.”

According to preliminary calculations, the Dow Jones industrial average rose 122.14, or 1.2%, to 10,192.51.

Broader stock indicators also moved sharply higher. The Standard & Poor’s 500 index was up 13.63, or 1.2%, at 1,156.85, and the Nasdaq composite index gained 17.47, or 0.9%, to 1,921.65.