Stocks finished moderately higher today but well off their highs after a turnaround in oil prices sapped a big rebound on Wall Street. And word today that...
NEW YORK — Stocks finished moderately higher today but well off their highs after a turnaround in oil prices sapped a big rebound on Wall Street.
And word today that Yahoo has called off talks of any deal with Microsoft is giving investors one more reason to rein in the enthusiasm that drove a rally early in the session.
The Dow Jones industrial average ended the day up 57.81 at 12,141.58. The Dow had been up by as much as 185 points earlier in the session. On Wednesday, the stock market fell almost 206 points as oil prices rebounded, fanning concerns that inflation will further pinch consumers and lead central banks to raise interest rates.
Broader stock indicators moved in and out of positive territory in trading today. The Standard & Poor’s 500 index closed up 4.38 at 1,339.87, while the Nasdaq composite index rose 10.34 to 2,404.35.
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Beyond the market’s recurring worries about rising oil prices and inflation, a management shakeup at Lehman Brothers drew fresh attention to troubles in the financial sector. Lehman, which earlier this week said it would report a quarterly loss of $2.8 billion, today ousted its chief financial officer and chief operating officer. But while long-term concerns likely remain about the sector, financial shares were moving higher. Lehman fell $1.05, or 4.4 percent, to $22.70.
Advancing oil prices, which have touched off many stock market retreats in recent weeks, upended the market’s recovery and weighed on enthusiasm that followed the Commerce Department’s report that retail sales rose 1 percent in May. The gain marked the biggest improvement in six months and it offered some investors hope that the government’s 57 million economic stimulus checks were indeed oiling the economy.
Fears returned that rising energy prices would overshadow the benefits of the windfall for retailers.
Bond prices fell today as some investors left the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, jumped to 4.21 percent from 4.07 percent late Wednesday.
The dollar rose against other major currencies, while gold prices fell.
Light, sweet crude rose 36 cents to settle at $136.74 a barrel on the New York Mercantile Exchange. Oil prices, which have been volatile lately, fell then bounced higher today amid concerns about supply disruptions in Nigeria.
In economic news beyond the retail sales report, the Labor Department said first-time claims for unemployment benefits rose, but some of the pickup was due to volatility following the Memorial Day holiday.
The Commerce Department said business inventories rose by 0.5 percent in April — double the 0.2 percent increase logged in March. It was the strongest showing since inventories rose by 1 percent in January.
And U.S. import prices jumped 17.8 in May, the third straight monthly increase, while prices from China hit a fresh record, suggesting rising oil prices and a weak dollar are fanning inflationary pressures.
Belgian Brewer InBev, whose brands include Beck’s and Stella Artois, offered late Wednesday to buy the maker of Budweiser, Bud Light and other brands for $65 a share. Anheuser-Busch rose $2.95, or 5.1 percent, to $61.30.
The reports were enough to persuade some investors to buy after several tough sessions, including a 400-point decline Friday, when oil prices surged.
“I think expectations since last Friday have been grinding so low that any bit of news is taken with a huge lift,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. “I just think that emotions are so fragile right now that it’s creating these exacerbated market moves.”
Investors also got another signal the Federal Reserve is poised to reverse recent policy and begin raising key interest rates. In addition to comments released Wednesday afternoon with its Beige Book economic survey that pointed to no rate cut at the June 24-25 meeting, Charles Plosser, the president of the Philadelphia Federal Reserve Bank, said in an interview on CNBC there is “no question” the Fed will have to raise rates to curb inflation before it gets “out of control.”
While the timing of such a move cannot be predicted, Plosser said, “We have to be very careful that we don’t slip into a situation where we create inflation and support higher prices,” but the timing of any move is still an “open question.”
While the market typically prefers interest rate cuts to hikes, some investors seem to be hoping for an increase that would ease the threat of inflation.
Oscar Gonzalez, an economist with John Hancock Financial Services, said concerns about accelerating inflation are “very clear,” based on surveys of professionals, consumers and producers and manufacturers, along with continually increasing commodity prices.
“The risks of inflation triggered by too low interest rates has increased dramatically since the first quarter,” Gonzalez said. “Obviously it’s showing up in their radar screen.”
In corporate news, Citigroup is closing a hedge fund cofounded by current chief executive Vikram Pandit. Citi shares rose 68 cents to $19.89.
Borders rose 17 cents to $6.87 after one of its biggest shareholders, hedge fund manager William Ackman, said the bookseller should consider approaching Amazon.com to propose that the online retailer acquire Borders. Ackman is co-founder of Pershing Square Capital Management, and owns 30 percent of Borders. Amazon shares fell $1.13 to $76.15.