Investors encouraged by falling oil prices bid stocks sharply higher yesterday as fears of a slowdown in consumer spending eased. The broad-based rally boosted...
NEW YORK — Investors encouraged by falling oil prices bid stocks sharply higher yesterday as fears of a slowdown in consumer spending eased. The broad-based rally boosted the Dow Jones industrial average 112.17 points to 10,252.29.
Microsoft, one of the 30 Dow stocks, rose 27 cents to close at $25.49 a share. Boeing, also a Dow stock, gained 91 cents to $60.41.
Broader stock indicators also climbed.
The Standard & Poor’s 500 index was up 11.64 at 1,165.69, and the Nasdaq composite index gained 17.65 to 1,994.43.
Most Read Stories
- UW Huskies awarded No. 4 seed for College Football Playoff, to play No. 1 Alabama in Peach Bowl
- Once extinct in Washington, fishers return to Mount Rainier
- Seahawks’ Earl Thomas hints at retirement on Twitter after breaking bone in leg vs. Panthers
- Fancy a weekend jaunt? Seattle, Portland booms put I-5 drivers in a jam | FYI Guy
- Three rounds of lowland snow possible, starting Sunday night
Though oil futures settled narrowly lower, a sharp drop in crude prices earlier in the day built on last week’s losses, giving investors hope that gasoline prices would fall in time for the summer driving season and consumer spending would remain strong. After falling below $48 per barrel earlier in the session, a barrel of light crude settled at $48.61, down 6 cents, on the New York Mercantile Exchange.
“I would argue the stock market is probably about 5 percent undervalued, but you need a catalyst to get it going, to give investors confidence to buy stocks,” said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. “That catalyst is clearly the decline in the price of oil. That’s causing investors to jump on values they see in this market.”
The drop in oil and other commodity prices sent investors looking for bargains in other areas, including the long-dormant technology sector. And that helped the Nasdaq, which has lagged behind the other major indexes, to gain ground.
“We’re definitely seeing strength in the Nasdaq, in particular, and that’s a healthy sign for the market,” said Michael Sheldon, chief market strategist at Spencer Clarke. “Of the times we’ve rallied over the past few years, a rally with the Nasdaq is far stronger than one where it’s lagging.”
Merger and acquisition activity remained strong as corporate America continued to express its optimism about the economy by pursuing deals. United Parcel Service added $1.03 to $73.18 after it announced an agreement to acquire smaller rival Overnite for $1.25 billion in cash — a 46 percent premium on Overnite’s closing price Friday. Shares of Overnight surged 43.8 percent, or $12.94, to $42.52.
Home-improvement retailer Lowe’s jumped 5.6 percent, to $55.80, after it reported a 31 percent increase in quarterly profits but added that poor weather around the nation had kept do-it-yourselfers indoors. The company missed Wall Street’s profit expectations by 2 cents per share.