Oil surprise staves off Wall Street lull
US stocks rose yesterday, shaking off a slide in China’s equity market as investors responded well to a surprise drop in crude oil stockpiles that might suggest an improving demand outlook.
Exxon Mobil and Chevron led the blue-chip Dow industrials index’s advance. Exxon Mobil was up 2.3 per cent at $68.00, and Chevron gained 1.8 per cent to $68.16.
Murphy Oil was up 3.1 per cent at $58.05 and the S&P Energy index gained 1.9 per cent by the market close. US crude oil rose 4.7 per cent, or $3.23, to settle at $72.42 a barrel after a report showed the biggest drop in inventories since May.
Wall Street had opened lower after the Shanghai Composite index fell to a two-month low as investors fretted that China’s 20 per cent slide over the past two weeks would continue.
“We see more people shrugging off overseas weakness and putting money into equities here, not wanting to see the stocks come down,” said Michael James, a senior trader at Wedbush Morgan. “Firmer oil prices are helping the overall equities market, but there is a positive bias toward equities to begin with.”
The Dow Jones industrial average gained 61.22 points, or 0.66 per cent, to 9,279.16. The Standard & Poor’s 500 index rose 6.79 points, or 0.69 per cent, to 996.46. The Nasdaq Composite index advanced 13.32 points, or 0.68 per cent, to 1,969.24.
Healthcare stocks also outperformed the broader market, led by Merck. The drugmaker’s stock was up 2.5 per cent at $31.48. Shares of rival Pfizer added 2.4 per cent to $16.37.
But the tech-heavy Nasdaq’s advance was curbed by Hewlett-Packard, which was down 0.3 per cent at $43.83 after the computer and printer maker expressed caution about business demand. Earlier, H-P hit an intra-day low at $42.52.
Another speed bump came courtesy of Deere, which shed 2.9 per cent to $43.78 after the tractor and farm equipment maker said it expected to barely break even in the fourth quarter.
With many traders on vacation, volume was light on the New York Stock Exchange, with only about 988m shares changing hands, sharply below last year’s estimated daily average of 1.49bn.