Energy Stocks Lead Market Rally

American stocks rose as investors snapped up energy shares trading at their cheapest level in 18 months, while better-than-forecast earnings at FedEx Corp. buoyed industrial companies.Exxon Mobil Corp. and ConocoPhillips led oil stocks to their biggest gain in six weeks and helped the Standard & Poor’s 500 Index rebound from its steepest drop since February 2007. FedEx Corp. rallied 3.7% as lower fuel costs helped boost profit at the largest air-cargo carrier. Lehman Brothers Holdings Inc. slid 6.9%, adding to yesterday’s record 45% tumble and sending financial stocks to a second-straight decline, after the securities firm posted a wider loss than analysts estimated.The S&P 500 advanced 7.53 points, or 0.6%, to 1,232.04. The Dow Jones Industrial Average added 38.19, or 0.3%, to 11,268.92, and the Nasdaq Composite Index climbed 18.89, or 0.9%, to 2,228.7. More than two stocks rose for each that dropped on the New York Stock Exchange.“The valuations of some of these energy companies are at levels that warrant addressing by a lot of value investors,” the president and chief investment officer of Cabot Money Management, Robert Lutts, said. “If you were waiting for bargains in the energy sector, you’ve got some today.”The valuation of companies in the S&P 500 Energy Index sank to an average 9.9 times trailing earnings yesterday, the cheapest since March 2007, as oil slid to a five-month low on speculation OPEC won’t cut output. The gauge of 39 energy producers has tumbled 26% from its May record as oil retreated 30% from a peak of $147.27 a barrel in July on signs global economic growth is slowing.Crude oil futures yesterday fell 68 cents to $102.58 a barrel, the eighth drop in nine days and the lowest price since April. Natural gas futures fell almost 2%. Energy shares still rose the most among the S&P 500’s 10 main industry groups, with 38 of 39 companies in the group advancing.The gains pared the S&P 500’s decline this year to 16%. The main benchmark for American equities is poised for its first annual drop since 2002, led by financial companies, as more than $500 billion in bank credit losses and asset writedowns linked to falling home prices damp the outlook for earnings.

Energy Stocks Lead Market Rally

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