US stocks up as oil price drops

Wall Street roared back today, propelling the Dow Jones industrials up 115 points as crude oil prices plunged more than US$2 (€1.66) and consumer confidence surged to a three-year high.

Investors bought up stocks as crude oil, which had closed above US$60 (€49.74) per barrel on Monday for the first time, fell to US$58 (€48.08) amid profit-taking following the recent runup in prices. Light crude settled at US$58.20 (€48.24), down US$2.34 (€1.94), on the New York Mercantile Exchange.

In addition, the Conference Board’s consumer confidence index rose to its highest level since 2002, and consumers’ optimism about the future also rose. That gave the market enough impetus to move higher, gaining back a little of the previous week’s oil-driven selling.

“The selloff last week was a little much based on the underlying economic fundamentals,” said Scott Wren, equity strategist for AG Edwards & Sons. “Companies were able to make plenty of money over the last two quarters when oil was in the mid-50s (dollars), and consumers will continue to spend money at these levels. It was just overdone, and we’re getting some of it back now.”

The Dow Jones industrial average rose 114.85, or 1.12%, to 10,405.63.

Broader stock indicators also moved sharply higher. The Standard & Poor’s 500 index was up 10.88, or 0.91%, at 1,201.57, and the Nasdaq composite index climbed 24.69, or 1.21%, to 2,069.89.