Market rallies, led by gains on the Nasdaq, as oil prices sink on inventory buildup.
October 27, 2004: 12:11 PM EDT
NEW YORK (CNN/Money) - A sharp drop in oil prices sparked a broad market rally at midday Wednesday, with tech stocks getting the biggest boost.
The Nasdaq composite (up 28.62 to 1,957.41, Charts) jumped 1.5 percent just after noon ET.
The Dow Jones industrial average (up 59.95 to 9,948.43, Charts) and the Standard & Poor's 500 (up 7.39 to 1,118.48, Charts) index each rose about 0.6 percent.
Gains were broad-based, with 27 of 30 Dow issues rising.
The major gauges had traded in a tight range in the early going, but broke out to the upside as oil prices sank and techs recovered.
"There's an inverse relationship with stocks and oil right now, where crude falls and stocks rise in reaction," said Mark Bryant, senior vice president at Brean, Murray & Co.
Oil prices gyrated after the release of the weekly oil inventory report from the Energy Information Administration (EIA), but then abruptly tumbled.
"The bottom fell out of the oil contract, it was pretty impressive to see," Bryant said. "There's a tremendous amount of speculation in that market right now, and I think the weekly report came out and people just jumped on it."
U.S. light crude for December delivery sank $1.32 to $53.85 a barrel on the New York Mercantile Exchange, a decline of around 2.6 percent.
The weekly oil report showed a bigger-than-expected rise in crude oil inventories. Additionally, gasoline inventories rose, when analysts were expecting a fall.
On the move
A variety of technology stocks gained.
Intel (up $0.39 to $21.79, Research) popped 2 percent, rising with other chip stocks. The Philadelphia Semiconductor (up 8.26 to 405.03, Charts) index, or the SOX, added 2.5 percent.
Microsoft (up $0.35 to $28.25, Research) gained 1.5 percent. A slew of software issues gained as well, pushing the Goldman Sachs Software (Charts) index up 2.7 percent.
Veritas Software (up $0.96 to $22.49, Research) gained close to 5 percent. The maker of software for computer data storage reported earnings late Tuesday of 22 cents a share, up from 15 cents a year earlier and 3 cents more than what analysts were expecting.
Sina (up $7.40 to $35.59, Research), a leading Chinese Internet search engine, jumped 25 percent in active Nasdaq trade. The company reported third-quarter earnings late Tuesday that rose from a year earlier and also boosted its fourth-quarter revenue forecast.
Among blue chips, Dow stock DuPont (up $1.33 to $42.73, Research) gained 3 percent, Honeywell (up $0.60 to $33.55, Research) added 2.2 percent and General Motors (up $0.76 to $38.33, Research) rose about 2 percent.
Boeing (up $0.40 to $50.38, Research) inched higher after it reported earnings of 44 cents a share, up from a year earlier and more than expected. The commercial and military jet maker also boosted its 2004 earnings forecast.
Unsurprisingly, Exxon Mobil (down $0.60 to $48.79, Research) was one of the few Dow decliners. A variety of oil stocks fell, pushing the Philadelphia Oil Services (up 8.26 to 405.03, Charts) index down 1.5 percent.
Also falling on the Dow, Procter & Gamble (down $2.02 to $51.19, Research), which lost 3 percent even after it reported improved quarterly earnings.
Market breadth was positive. On the New York Stock Exchange, advancers beat decliners nearly two to one as 685 million shares changed hands. On the Nasdaq, winners beat losers nine to five on volume of 930 million shares.
New home sales rise
The morning's economic news was mixed.
New home sales edged up to a 1.2 million annual rate in September while analysts had expected a decline.
An earlier report showed durable goods orders rose 0.2 percent in September, after falling a downwardly revised 0.6 percent in August. Economists surveyed by Briefing.com thought goods would rise 0.5 percent.
Treasury prices fell, pushing the 10-year note yield up to 4.02 percent from 4 percent late Tuesday. Treasury prices and yields move in opposite directions.
In currency trading, the dollar gained versus the euro and inched lower versus the yen.
In global trade, Asian-Pacific markets closed mixed and European markets gained in late trade.
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