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Energy leads Wall Street higher, but airlines weigh

Energy leads Wall Street higher, but airlines weigh
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First Published: Wed, Jan 12 2011. 09 52 AM IST
Updated: Wed, Jan 12 2011. 09 52 AM IST
New York: Energy shares led US stocks to modest gains on Tuesday as crude prices jumped, but consumer-related and transportation shares limited the rise.
Stocks pared gains on stronger-than-expected profits and outlooks after the first day of quarterly earnings reports.
US crude futures settled 2% higher at $91.11 per barrel after new production snags added to supply concerns even as the Trans Alaska Pipeline remained shut, idling 12% of US oil production.
Chevron, up 1.4% at $91.70, gave the Dow industrials the biggest lift.
“There’s a big feeling were going to have $100 barrel oil pretty quickly,” said Shawn Hackett, president at Hackett Advisors in Boynton Beach, Florida.
He said that is clearly bullish for the sector, but oil above $90 a barrel could “take disposable income away from the economy and could hurt demand.”
Airline shares were hit by the rise in crude, with the NYSE Arca airline index off 1.5% and the Dow Jones transport average lost 1% after hitting its highest in more than two-year on Monday. The S&P retail index dipped 0.3%.
The Dow Jones industrial average added 23.31 points, or 0.20%, to 11,660.76. The Standard & Poor’s 500 rose 2.76 points, or 0.22%, to 1,272.51. The Nasdaq Composite gained 4.87 points, or 0.18%, to 2,712.67.
Among companies reporting fourth-quarter results higher than expected was homebuilder Lennar Corp, which gained 7.4% to $20.30.
The PHLX Housing sector index gained 1.5%.
Stocks have rallied in recent weeks on optimism about profits, but the S&P 500 ended down the past three sessions, leading some analysts to question the rally’s durability.
“When you see a market going up in the morning and pulling back later in the day, it’s saying there’s some distribution going on, and at some point it may lead to a well overdue correction,” Hackett said.
Retailers were also hit as women’s clothier Talbots Inc shares tumbled 18.8% to $6.15 after it forecast a much bigger-than-expected quarterly loss.
Leading declines on the Dow, Verizon Communications Inc fell 1.8% to $35.27 after Verizon Wireless announced it will begin selling a version of Apple Inc’s iPhone. The news was expected, and Verizon had risen more than 11% in the past six-week.
Short-term technical resistance for the benchmark is seen round 1,280 while the area between 1,265 and 1,260 provides support.
Sears Holding Corp rose 6.3% to $75.02 after the store chain raised its profit outlook above Wall Street estimates, citing strong sales.
Alcoa Inc posted a quarterly profit that topped Wall Street’s expectations, though revenue slightly missed the analysts’ average estimate. The aluminum maker’s shares fell 1.2% to $16.29.
MBIA Inc rose 13.4% to $13.92, a level not seen since 2008, after a divided New York appeals court handed the bond insurer a crucial win in the legal battle over its restructuring plan.
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First Published: Wed, Jan 12 2011. 09 52 AM IST