Stocks managed to extend their gains into a second session Wednesday, as a bright outlook from Oracle and better-than-expected results from chipmaker Texas Instruments lifted the technology sector.
Some analysts said lower crude oil prices boosted equities because they help lift consumer spending and corporate profit margins.
“I think a lot of traders are taking some solace in the fact that $50-a-barrel oil is going to be a very hard ceiling to go through,” said Angel Mata, managing director of listed equity trading at Legg Mason Wood Walker. “Conventional thinking right now is that oil will continue to move up and down, but it’s not going to go through $50 and as it approaches $50, it will be hit pretty hard.”
Wednesday’s rise added to robust gains seen in Tuesday’s trading session, but some analysts were skeptical about whether the gains would hold, particularly after three weeks of persistent declines. After a strong post-election run-up in the market, stock prices declined in the first three weeks of 2005, the first time that has happened since 1982.
The Dow Jones industrial average was up 37.03 points, or 0.4 percent, at the close of trading, adding to a 93-point gain seen in Tuesday's trading session — the Dow's best daily performance of 2005. The broader Standard & Poor’s 500-stock index was finished with a gain of 5.66 points, or 0.5 percent, while the Nasdaq composite index rose 26.14 points, or 1.3 percent.
Oil prices were volatile after the U.S. government and an industry group issued mixed reports on fuel inventories. The government’s weekly report, which is most closely watched, showed a jump in crude stores, a sharp drop in gasoline supplies and an expected draw in distillates, which include heating oil. However, the American Petroleum Institute reported steep declines in all three categories.
The government’s report of a build in crude alleviated pricing pressure, and crude futures declined 86 cents to $48.78 on the New York Mercantile Exchange. Oil prices were still hovering uncomfortably close to the $50 mark, however, amid growing anxiety about trouble in the Middle East ahead of the upcoming elections in Iraq.
Investors were also focused on earnings and forecasts during a week when hundreds of companies were releasing results. The spate of good news and momentum from the previous session raised some hope that investors would return to the market in greater numbers.
“I think it feels like we might be able to hold a few days to the upside, assuming corporate earnings news continues to cooperate,” said Jack Caffrey, equities strategist at J.P. Morgan Private Bank. “The good news is, the good news is spread around today. It’s not like people are taking their cue from any one data point. It seems to make for a somewhat healthier backdrop.”
Texas Instruments Inc. surged 7.3 percent, or $1.54, to $22.66, as the maker of chips for cell phones beat Wall Street’s expectations despite a dip in fourth-quarter profits compared to a year ago. The company warned that first-quarter revenue would be lower due to seasonal slowness and a buildup of inventory. Merrill Lynch upgraded the stock to “neutral” from “underperform,” citing a belief that the company was more likely to meet estimates in 2005.
Software maker Oracle Corp. gained 3 cents to $13.62 after reiterating its outlook for the current fiscal year and sharply raising its forecast for 2006, citing likely earnings gains related to its acquisition of PeopleSoft.
Sirius Satellite Radio Inc. shed 6 cents to $6.18 after posting wider fourth-quarter losses. Still, holiday sales drove revenues up fivefold, prompting the company to raise its 2005 year-end subscriber estimate to more than 2.5 million.
ConocoPhillips added $1.59 to $90.49 after more than doubling its fourth-quarter income due to high prices for crude and natural gas prices and better refining margins. The nation’s third-largest oil company beat estimates by a wide margin.
Overseas, Japan’s Nikkei stock average added 0.9 percent. In Europe, France’s CAC-40 shed 0.1 percent, Britain’s FTSE 100 rose 0.1 percent and Germany’s DAX index lost 0.5 percent.