Stocks rebounded moderately Friday, as a stronger than expected retail sales report showed that higher oil prices aren’t scaring consumers away from spending.
Federal Reserve Chairman Alan Greenspan’s positive comments on oil prices also encouraged investors, but the major indexes finished the week lower following sharp declines the previous two sessions.
Wall Street has worried for months that soaring oil and gasoline prices would prompt consumers to spend less. But the Commerce Department reported that retail sales jumped 1.5 percent in September, much more than the 0.6 percent gain economists forecast.
Reassuring words from Greenspan, who said surging energy costs will have less of an impact on the economy than the energy crisis of the 1970s, cheered investors even as oil prices pushed toward $55 per barrel. A barrel of light crude settled at $54.93, up 17 cents, on the New York Mercantile Exchange.
“The retail sales figures were particularly good news and could have a strong impact in over all GDP (gross domestic product) growth,” said Joseph McAlinden, chief investment officer at Morgan Stanley Investment Management. “And certainly Greenspan’s opinion on the state of the world has helped.”
At the close the Dow Jones industrial average was up 38.93 points, or 0.4 percent, at 9,933.38, regaining some ground after a 153-point drop over Wednesday and Thursday.
Broader stock indices finished Friday modestly higher. The Standard & Poor’s 500-stock index was up 4.91 points, or 0.5 percent, at 1,108.20, and the technology-focused Nasdaq composite index rose 8.48 points, or 0.5 percent, to 1,911.50.
Despite Friday’s gains, stocks ended the week lower. The sharp climb in crude oil futures weighed heavily on the markets during the week, siphoning investor enthusiasm from stocks just as third-quarter earnings season got underway. For the week, the Dow lost 1.21 percent, the S&P 500 fell 1.24 percent and the Nasdaq composite lost 0.44 percent.
Investors worried about inflation received good news Friday from the Labor Department, which said wholesale prices, as measured by the Producer Price Index, rose just 0.1 percent in September. While the PPI was up from the 0.1 percent decline in August, the figure was small enough to reassure Wall Street that inflation would not be a major problem for the foreseeable future.
“It’s nice to see a bit of a rebound today, but it’s not convincing in any manner,” said Michael Palazzi, managing director of equity trading at SG Cowen Securities. “We’re not going anywhere meaningful until the price of oil comes down. It’s basically choking us.”
Consumers seemed to share that sentiment, as high gas prices have driven down confidence in the economy. The University of Michigan’s consumer sentiment index fell to 87.5 in October, down sharply from the 94.2 figure in September and far lower than Wall Street’s expectation of 94.
Tech shares were flat earlier in the session as Juniper Networks Inc.’s newly acquired NetScreen computer security division posted a drop in revenue, leaving investors wondering about the strength of computer networking and security companies. Juniper slid $1.27 to $23.76.
In other earnings news, financial company Wachovia Corp. reported a 14 percent rise in third-quarter earnings due to gains in its high-end investment and wealth management businesses. Wachovia, which beat Wall Street forecasts by a penny per share, climbed $1.16 to $48.45.
Charles Schwab Corp. rose 50 cents to $8.97 after it posted a loss for the third quarter due to one-time charges related to restructuring and the sale of its capital markets business. Without the charges, however, the brokerage met Wall Street forecasts for its results.
Sun Microsystems Inc. swung to a loss in its first quarter, with restructuring charges and a legal settlement wiping out the computer maker’s profits. The company lost 5 cents per share for the quarter, more than the 3 cents per share loss analysts expected. Sun Microsystems was unchanged at $3.97.
Mail-order DVD rental company Netflix Inc. plummeted $7.13, or 40.9 percent, to $10.30 after it announced that Amazon.com Inc. would likely compete with Netflix for DVD rentals. Netflix said it will slash its rental fees and postpone expansion plans overseas in response. Amazon.com fell 55 cents to $38.55.
Overseas, Japan’s Nikkei stock average fell 0.47 percent. In Europe, Britain’s FTSE 100 was down 0.14 percent, France’s CAC-40 rose 0.16 percent and Germany’s DAX index slumped 0.47 percent.