BackWall Street rebounds from sell-off, but down for week
Wall Street rebounds from sell-off, but down for week
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New York: US stocks rose on Friday, bouncing back from a three-day sell-off as oil prices stabilized, but unease over the Libyan rebellion could be enough to keep buying in check.
The S&P 500 lost 1.7% for the week, breaking a three-week streak of gains. Friday’s bounce followed a late recovery on Thursday that showed buyers were ready to support shares after a bout of selling.
Analysts have been calling for a correction in stocks, with the S&P 500 up 25.8% since the start of September. Much weaker-than-average volume on Friday cast doubt on stocks’ ability to move higher.
“It’s going to be a bumpy ride. I don’t think it’s just one big correction and we’re out of it. I think we’ll see multiple, small corrections over the next few months before the market can really decide what the end game in the Middle East is," said David Kelly, the chief market strategist for JPMorgan Funds in New York.
Brent crude futures for April rose 78 cents to settle at $112.14 barrel, easing from a 2-1/2 -year high of $119.79 on Thursday after a source said Saudi Arabia raised its oil output following days of bloody unrest in fellow producer Libya.
As stocks rose, the CBOE Volatility Index, or VIX, Wall Street’s fear gauge, dropped 9.9% to 19.22, falling below 20 after three days of sharp gains.
The Dow Jones industrial average gained 61.95 points, or 0.51%, to end at 12,130.45. The Standard & Poor’s 500 Index advanced 13.78 points, or 1.06%, to finish at 1,319.88. The Nasdaq Composite Index rose 43.15 points, or 1.58%, to close at 2,781.05.
Volume was a low 7 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, well below last year’s daily average of 8.47 billion.
For the week, the Dow lost 2.1% and the Nasdaq declined 1.9%.
Watching Libya and oil
Stock investors have been pressured this week by worries that the turmoil in Libya could spread to other major oil-producing countries, causing gains in energy prices that could become problematic for the economic recovery.
The UN Security Council was to meet to discuss sanctions against Libyan leaders who are locked in a bloody battle for survival against a popular uprising.
Late last month, protests in Egypt shook the market, but stocks quickly recovered.
“The market has taken this (unrest in Libya) pretty well" so far, said Jim McDonald, Northern Trust’s chief investment strategist in Chicago. Northern Trust has $643.6 billion in assets under management.
“If we see oil prices normalize back down to where they were at the end of the year because of increased stability in the Middle East, that would be constructive to global growth and investors would love that," he said.
McDonald, whose firm is “overweight" on energy shares, said as long as oil prices stay below levels that would force a recession, they are supportive for S&P 500 earnings growth.
Adding to the day’s positive tone, an index of consumer sentiment rose in February to its highest level in three years, according to the Thomson Reuters/University of Michigan Surveys of Consumers.
Among top boosts to the Nasdaq were shares of Intel, up 2.7% at $21.86. Longbow started coverage of the company with a “buy" rating. A semiconductor index shot up 2.6%.
In other company news, Boeing Co shares rose 2.2% to $72.30 and led the Dow higher after the US aircraft maker won a $30 billion contract to build 179 US Air Force refueling planes.
Financial and material sectors led the S&P 500’s gains,with shares of JPMorgan Chase up 1.7% at $46.68.
Advancing stocks outpaced declining stocks on the NYSE by a ratio of about 4 to 1 on both the NYSE and the Nasdaq.
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