Markets Shake Off Oil Hike, Reverse Earlier Fall

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Stocks turned higher today after the government reported a larger-than-expected increase in orders for big-ticket manufactured goods, offsetting some unease about a rise in oil prices.

The Commerce Department said orders for durable goods jumped 1.3% in July compared to the previous month, led by a big gain in demand for commercial aircraft. That was well above the 0.1% expected by economists surveyed by Thomson/IFR.

Durable goods, which also include cars, appliances and machinery, are under scrutiny not only because they reflect business spending, but because they are also an indicator of consumer confidence. The July increase equaled a 1.3% rise in June; both months produced the strongest gains since a 4.1% leap last December.

Rising energy prices initially curtailed the market’s advance but investors eventually appeared to set aside some of their concerns. Light, sweet crude rose $2.55 a barrel to $118.82 on the New York Mercantile Exchange on worries that Tropical Storm Gustav might hit Gulf of Mexico installations and after the government reported weekly inventory figures for crude and gasoline that largely met expectations.

In midmorning trading, the Dow Jones industrial average rose 62.86, or 0.55%, to 11,475.73.

Broader stock indicators also rose. The Standard & Poor’s 500 index advanced 7.13, 0.56%, to 8,330.49, and the Nasdaq composite index rose 13.43, or 0.57%, to 2,375.40.

Stocks ended mixed yesterday as what was then Hurricane Gustav sent oil prices higher and offset a better-than-expected reading on consumer confidence.

Bond prices fell today. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.82% from 3.78% late yesterday. The dollar was mixed against other major currencies, while gold prices rose.

The rise in oil prices weighed on companies such as airlines, which have been hit hard by rising costs for jet fuel, and buoyed names in the energy sector.

Northwest Airlines Corp. fell 97 cents, or 10%, to $8.58, while U.S. Airways Group fell 55 cents, or 7.5%, to $6.79.

Oil refiner Tesoro Corp. rose $1.63, or 9.8 percent, to $18.20, while Valero Energy Corp. added $1.70, or 5.1 percent, to $35.30.

Several retailers advanced after signaling that business is stronger than some investors might have expected, offering investors some reassurance about consumer spending and in turn, the health of the economy.

Borders Group Inc. jumped $1.39, or 26%, to $6.75 after the bookseller reported better-than-expected second-quarter and slashed debt.

Clothing retailer Talbots Inc. rose $1.49, or 15%, to $11.49 after the company raised its forecast for 2008 per-share earnings.

Chico’s FAS Inc. rose Tuesday, after the women’s apparel retailer its said fiscal second-quarter profit fell 83% amid a weak environment, but results beat analyst expectations.

Advancing issues outnumbered decliners by about 3 to 1 on the New York Stock Exchange, where volume came to a light 149.3 million shares.

The Russell 2000 index of smaller companies rose 6.82, or 0.94%, to 730.33.

Overseas, Japan’s Nikkei stock average fell 0.20%. In afternoon trading, Britain’s FTSE 100 rose 0.49%, Germany’s DAX index fell 0.42%, and France’s CAC-40 slipped 0.08%.


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