US stocks: Markets up with oil, consumer confidence

NEW YORK - US stocks edged higher today as a jump in crude oil prices boosted Exxon Mobil and the energy sector, while an index showed consumer confidence rose to a four-month high.

The slightly higher finish helped both the blue-chip Dow average and the broad Standard & Poor's 500 recover from yesterday's declines, their biggest one-day drop in two months.

Exxon Mobil shares gained 0.7 per cent to US$56.25 on the New York Stock Exchange, helping support both the Dow and the S&P 500.

US February crude futures jumped US$1.66 to settle at US$59.82 amid expectations of a sharp draw in US crude and distillate stockpiles in the latest week, as well as a cut in Opec supply next year. Earlier, crude prices rose above US$60 a barrel.

"The jump in oil prices lifted shares in the whole energy sector," said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York. "And we also had very strong confidence numbers, which helped support the rest of the market."

The Dow Jones industrial average was up 18.49 points, or 0.17 per cent, to end at 10,796.26. The Standard & Poor's 500 Index was up 1.63 points, or 0.13 per cent, at 1,258.17. The technology-laced Nasdaq Composite Index was up 2.05 points, or 0.09 per cent, at 2,228.94.

Among heavily weighted Nasdaq 100 stocks, online marketplace eBay Inc. rose 1.4 per cent, or 62 cents, to US$44.37 and contributed the most to the Nasdaq's gain. But the biggest drag came from shares of Apple Computer Inc, off 0.9 per cent, or 66 cents, at US$73.57. That reversed yesterday's gains for Apple, whose iPod digital music player was a top holiday seller.

Early in the session, Wall Street received some welcome news about how consumers view the US economy. The Conference Board's index of consumer sentiment rose in December to 103.6 from a November reading of 98.3. The level was the highest since August, before Hurricane Katrina and before a surge in oil prices. Economists had expected the index to rise to 101.8.

Industrial conglomerate 3M Co. was the Dow's best performer and rose 1.1 per cent, or 82 cents, to US$78.20.

In addition to 3M and Exxon Mobil, other major gainers in the Dow included insurer American International Group, up 0.7 per cent, or 46 cents, at US$68.41; US jet maker and defence contractor Boeing Co., up 0.6 per cent, or 43 cents, at US$70.96; chemical maker DuPont Co., up 0.6 per cent, or 24 cents, at US$43.26, and the world's largest retailer, Wal-Mart Stores Inc., up 0.2 per cent, or 11 cents, at US$47.84.

The rise in oil prices also lifted shares of Chevron Corp.,up 1.5 per cent, or 81 cents, at US$56.70, and ConocoPhillips, up 1.4 per cent, or 79 cents, at US$58.29.

While higher energy prices often are negative for the broader stock market because they raise costs for consumers and corporations, they usually boost shares of energy companies.

An index of oil and natural gas producers' shares rose 1.6 per cent.

Still, lingering concern over the economy after yesterday's Treasury yield curve inversion kept gains in check, analysts said.

Yesterday, stocks declined as the yield on the benchmark 10-year US Treasury note fell below that of the two-year note for the first time since December 2000. This development, called an inversion of the yield curve, has predicted the start of a recession in the past.

"Some investors worry that if the inversion persists, it may signal a tough time ahead for the economy," said Hans Olsen, chief investment officer at Bingham Legg Advisers in Boston. "But it's still too soon to know it for sure."

Volume on the New York Stock Exchange was moderate, with about 1.06 billion shares changing hands, well below last year's daily average of 1.46 billion shares. On Nasdaq, about 1.23 billion shares traded, also sharply below last year's daily average of 1.81 billion.

Advancing shares beat decliners by a ratio of about 7 to 4 on the NYSE, while on Nasdaq, gainers outnumbered decliners by a ratio of about 8 to 7.

- REUTERS