Stocks ended a back-and-forth session with modest advances Thursday as a sharp drop in oil prices helped counter renewed concerns about the strength of the economy.
Oil fell nearly $5 per barrel after China announced plans to raise caps on gasoline and diesel fuel prices, a move that could ease global demand. The pullback in oil was welcome after weeks in which rising prices have pinned down investor sentiment with fears that the run-up would force businesses and consumers to curb spending.
But worrisome comments from Citigroup Inc. perhaps damped some investors’ spirits. The bank warned that a “substantial” amount of write-downs on bad debt are still to come. The remarks from Citi’s chief financial officer, Gary Crittenden, sent Citigroup shares lower and at times weighed on the financial sector. Citi was among the steepest decliners of the 30 stocks that make up the Dow Jones industrial average.
But while Citi’s comments about faltering debt renewed worries about credit markets, the drop in oil seemed to encourage some investors to buy stocks.
“It really seems to be a tug-of-war between the good news and the bad news, or the not-as-bad news and the terrible news,” said Jennifer Ellison, principal with wealth management firm Bingham, Osborn & Scarborough in San Francisco. “I think it’s going to be hard for the market to find a trend when there is still this undercurrent of bad economic data and negativity in the financial sector and the high price of oil.”
The Dow rose 34.03, or 0.28 percent, to 12,063.09. The Dow traded below the 12,000 mark in Wednesday’s session for the first time since mid-March and sank below it briefly again in trading Thursday. Though the Dow fell by more than 100 points Wednesday it managed to finish above the 12,000 mark.
Broader stock measures also advanced. The Standard & Poor’s 500 index rose 5.02, or 0.38 percent, to 1,342.83, and the Nasdaq composite index jumped 32.35, or 1.33 percent, to 2,462.06.
Advancing issues narrowly outpaced decliners on the New York Stock Exchange, where consolidated volume came to 4.44 billion shares, essentially flat with Wednesday.
Crude oil futures fell $4.75 to settle at $131.93 per barrel on the New York Mercantile Exchange after China disclosed plans to raise prices for gasoline and diesel fuel by 16 percent and 18 percent, respectively.
Bond prices fell as stocks fluctuated. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 4.21 percent from 4.14 percent late Wednesday.
The dollar traded mixed against other major currencies, while gold prices rose.
Mixed economic reports didn’t point investors in a clear direction. A regional manufacturing report from the Philadelphia Federal Reserve pointed to slumping demand and rising prices. And the Conference Board, a private business group, said its forecast of future economic activity ticked higher by 0.1 percent in May.
The Labor Department reported that initial claims for unemployment declined by 5,000 last week from the previous week. The decrease was a bit smaller than expected, and the four-week moving average of initial claims, a less volatile indicator, rose — a sign that the U.S. job market remains strained.
Alfred Goldman, chief market strategist at Wachovia Securities in St. Louis, said the economic news wasn’t wholly unexpected and that mixed reports will likely continue and unnerve some investors.
“We think the market is in a period of transition,” he said. “In such an environment confidence is often very thin.”
Volatility is likely to continue Friday because of the expiration of options contracts. Known as “quadruple witching,” it marks the simultaneous expiration of contracts for stock index futures, stock index options, stock options and single stock futures and often leads to heavy trading near the start and end of the session.
Citigroup fell 23 cents to $20.17 Thursday after the company’s comments about the likelihood of further write-offs of bad debt.
Circuit City Stores Inc. fell 7 cents to $3.98 after posting a first-quarter loss that was wider than last year’s due to sinking sales at established stores. The electronics retailer also said it is suspending its dividend.
The Russell 2000 index of smaller companies rose 7.12, or 0.97 percent, to 737.83.
Overseas, Japan’s Nikkei stock average sank 2.23 percent. Britain’s FTSE 100 fell 0.84 percent, Germany’s DAX index slipped 0.12 percent, and France’s CAC-40 fell 0.59 percent.