WORLD> America
|
WORLD> America
|
|
Stocks soar on drop in oil, Wells Fargo report
(Agencies)
Updated: 2008-07-17 08:20 Bond prices declined. The yield on the benchmark 10-year Treasury note, which moves opposite its price, jumped to 3.94 percent from 3.82 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices fell. Oil prices declined after Energy Department figures showed that domestic inventories of crude oil and gasoline rose last week, rather than declining as analysts had expected. "I think what you're seeing is people are feeling more confident that civilization as we know it is not going to cease to exist and that we're going to make a landing here," Genter said of the decline in oil. "The negative is there is not much of a catalyst here to really pick us up and get us back in the air." The Labor Department's report that its Consumer Price Index rose 1.1 percent in June came after economists had expected a gain of 0.8 percent. Two-thirds of the increase is linked to surging energy prices. The core reading, which excludes often volatile food and energy costs, ticked up 0.3 percent. Wall Street has been concerned in recent months that rising prices for necessities like food and fuel would force investors to curb their spending in other areas. A pullback is a disturbing prospect for investors as consumer spending accounts for more than two-thirds of US economic activity. In addition, rising prices could lead the Federal Reserve to raise interest rates, a move that risks derailing economic growth by making access to capital more expensive. Beyond the inflation reading, which follows a report Tuesday that showed a 1.8 percent increase in wholesale prices for June, investors examined a Fed report that industrial production rose 0.5 percent in June after declining 0.2 percent in May. The increase was the highest since a 0.6 percent gain in July of last year. Minutes from the last month's meeting of the Federal Open Market Committee, the arm of the Fed that sets interest rates, indicated that policymakers believed that the next move on rates would be an increase. The Fed in June broke a string of reductions by leaving rates unchanged at its last meeting, a recognition that lower rates had weighed on the dollar and led to increases in commodities such as oil and food. But given the big developments in the financial system over the past several days, the minutes were largely regarded by the market as old news. It was a huge day for sectors such as financials and airlines that have seen massive sell-offs recently. Wells Fargo & Co. said its second-quarter earnings fell 22 percent as more customers at the nation's fifth-largest bank failed to repay loans. But the company's results beat Wall Street expectations, and investors were pleased by Wells Fargo's decision to raise its quarterly dividend to 34 cents from 31 cents. Wells Fargo rose $6.72, or 32.8 percent, to $27.23. Delta Air Lines Inc. rose $1.24, or 26.6 percent, to $5.91 after reporting that high fuel prices led to a hefty second-quarter loss despite a strong increase in sales. The results topped Wall Street estimates, however, which excluded one-time items. The Russell 2000 index of smaller companies rose 24.40, or 3.68 percent, to 686.75. Overseas, Japan's Nikkei stock average rose 0.05 percent. Britain's FTSE 100 fell 0.60 percent, Germany's DAX index rose 1.21 percent, and France's CAC-40 rose 1.26 percent. |
