Wall St up as oil price recovers

Wall Street rose, as a recovery in the price of oil offered investors confidence to pick up beaten-down stocks. Goldman Sachs said the selloff was overdone.

In 12.40pm trading in New York, the Dow Jones Industrial Average climbed 1.4 per cent, while the Nasdaq Composite Index rose 1.6 per cent. In 12.25pm trading, the Standard & Poor's 500 Index gained 1.2 per cent.

"We've seen such a strong selloff and moved into correction territory for the year, there's more of a 'sentiment-in-momentum' trade that is underway rather than a focus on fundamentals," Bill Northey, chief investment officer of the private client group at US Bank, told Reuters.

Rallies in shares of Exxon Mobil and those of Chevron, last trading 4.8 per cent and 4.4 per cent higher respectively, led the gain in the Dow.

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Energy stocks moved higher with oil prices. Brent crude traded 1.5 per cent higher at US$30.76 a barrel while US crude's West Texas Intermediate traded 55 cents stronger at US$31.03 a barrel.

"That rise in the price of oil off of the lows sends a nascent sense of stability to investors," Omer Esiner, chief market analyst at currency brokerage Commonwealth Foreign Exchange in Washington, told Bloomberg.

But the slump in oil prices remains a concern for the pace of inflation, including for US Federal Reserve policy makers.

"Headline inflation will return to target once oil prices stabilise, but recent further declines in global oil prices are calling into question when such a stabilisation may occur," St Louis Fed President James Bullard told the Economic Club of Memphis.

"With renewed declines in crude oil prices in recent weeks, the associated decline in market-based inflation expectations measures is becoming worrisome," according to Bullard.

To be sure, "for the macroeconomy as a whole, the relatively low crude oil prices the US is enjoying today are likely a bullish factor," Bullard noted.

Goldman strategist Abby Joseph Cohen told Bloomberg TV that the recent slide in equities was failing to take into account the outlook for the US economy and American corporate profits. "We need to put things into perspective. Stocks are probably the best place to be."

The number of applications for US unemployment benefits unexpectedly rose last week. A Labor Department report showed initial jobless claims climbed 7,000 to 284,000 in the week ended January 9.

"Claims are still low from a historical perspective, and we see little evidence in this morning's report to suggest anything other than healthy labour market separations," Jesse Hurwitz, an economist at Barclays in New York, told Reuters.

A separate Labor Department report showed import prices fell 1.2 per cent in December from the prior month, the sixth straight monthly decline.

Shares of JPMorgan Chase advanced, last up 2.4 per cent, after the bank reported a better-than-expected quarterly profit.

In Europe, the Stoxx 600 Index finished the day with a 1.5 per cent decline from the previous close. The UK's FTSE 100 Index dropped 0.7 per cent, Germany's DAX Index sank 1.7 per cent, while France's CAC 40 Index retreated 1.8 per cent.

- BusinessDesk

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