Dow jumps 124 as crude oil eases

Banks, led by Bank of America, and airlines help the market end a 2-day slide. A big fall in oil is trimmed after analysts boost price estimates. Gasoline hits $3.52 a gallon. McDonald's February sales disappoint. Will Sprint buy T-Mobile?

By Charley Blaine Mar 8, 2011 1:25PM
Charley BlaineUpdated: 10 p.m. ET

Stocks rallied strongly today after the Organization of Petroleum Exporting Countries was said to be considering boosting production to replace Libyan oil.

Light sweet crude in New York settled down 68 cents to $105.02 a barrel. Crude had been down as low as $103.33  but started to move higher after OPEC said it wouldn't hold an emergency meeting on the issue. Gold and silver were lower as well.

The Dow Jones industrials ($INDU), meanwhile, closed up 124 points, or 1%, to 12,214, led by Bank of America's (BAC) 4.7% gain to $14.69. The blue chips had been up as many as 160 points at noon ET. The Standard & Poor's 500 Index ($INX) added 12 points, or 0.9%, to 1,322. The Nasdaq Composite Index ($COMPX) added 20 points, or 0.7%, to 2,766.
Shares of Sprint Nextel (S) were up 4.7% to $4.69 on reports that the telecommunications company had held talks with Deutsche Telekom (DT) about buying the latter's T-Mobile USA mobile phone business.

Bank of America was the top performer among the 30 Dow stocks after CEO Brian Moynihan said the bank hopes to raise its dividend in the second half of the year and go substantially higher in 2012 or 2013 as it gets its mortgage business under control.

Moynihan's comments set off a surge in financial stocks, which were the market's strongest sector. Airlines and and industrial stocks also were higher. Energy shares were the laggards.

Article continues below.

Wednesday's market will be affected by a government report on oil inventories and a report mortgage applications. Earnings are due from Jo-Ann Stores (JAS) and Molycorp (MCP).

Oil, however, is running the stock market for now. If oil goes up, stocks will fall. Late Tuesday, crude oil was down slightly at at $104.52 a barrel. Futures trading suggests a flat open for stocks.

Gold slips, but silver and cotton are higher
While crude in the United States was lower today, Brent crude oil, the North Sea benchmark, was lower. It was quoted down $2.53 at $113.05 this afternoon.

Retail gasoline prices moved higher. AAA's Daily Fuel Gauge Report said gasoline nationally was averaging $3.517 a gallon today, up from Monday's $3.509.

Gold settled down $7.30 to $1,427.20 an ounce, as commodities mostly pulled back after a big rally on Monday. Silver settled down 20.7 cents to $35.658 an an ounce. Copper was up slightly at $4.339 a pound. Grains and cotton were lower. Interest rates were up slightly, with the 10-year Treasury yield hitting 3.544%, up from Monday's 3.497%.

The dollar was higher against major currencies.

Oil declined after Kuwait's oil minister said OPEC members were considering whether to convene an "urgent meeting." The losses were trimmed as fighting continued in Libya. Opponents of Libyan leader Moammar Gadhafi were trying to to recapture Bin Jawad, an important oil port.

Meanwhile, Goldman Sachs and Bank of America/Merrill Lynch raised their oil-price forecasts. On Monday, Goldman raised its second-quarter outlook for Brent crude by $4.50 to $105 a barrel.

Bank of America Merrill Lynch increased its Brent crude price forecast for this year to $108 a barrel from $88 and for next year to $95 a barrel from $85.

The Energy Information Agency boosted its 2011 forecast for crude oil, saying it would average $105 a barrel this year. That's up $14 from the agency's forecast in early February.

Energy prices -- New York close
Crude oil 

$105.02  $105.44  8.30%  14.93%
(per barrel)

 

 

 

 
Heating oil

$3.0111  $3.0657  2.27%  18.37%
(per gallon)

 

 

 

 
Natural gas 

$3.8640  $3.9270  -4.55%  -12.28%
(per mil. BTU)

 

 

 

 
Unleaded gasoline

$2.9467

$3.0039

-4.55%

-12.28%
(per gallon)

 

 

 

 
Brent crude

$113.06  $115.04  1.13%  19.32%
(per barrel)











Retail gasoline

$3.5170

$3.5090

4.42%

14.49%
(per gallon; AAA)












Will Sprint and T-Mobile become one?
Sprint Nextel shares rose after sources said Deutsche Telekom was willing to sell its T-Mobile USA unit to the company in exchange for a major stake in the combined entity.

Meanwhile, McDonald's (MCD) fell 1% to $75.54 and was the laggard among the Dow stocks. Analysts had expected a 3.6% increase in U.S. same-store sales; the company reported a 2.7% gain.  

Urban Outfitters (URBN) plunged 16.7% $31.66, the most in the S&P 500, after the clothing-chain operator reported earnings that fell short of projections.

Homebuilders were up sharply after Pultegroup (PHM), the largest homebuilder, said orders for the first two months of 2011 were up 11% from a year ago. Pultegroup was up 8.4% to $7.09. D.R. Horton (DHI) added 4.9% to $11.89.

Thanks to lower oil prices, Delta Air Lines (DAL), up 9.7% to $11.07, was the top performer of stocks in the Dow Jones Transportation Average ($DJT). The index was up 129 points, or 2.6%, to 5,147.

American Airlines parent AMR (AMR) was up 7.1% to $6.65. Southwest Airlines (LUV) added 7.6% to $12.66 after reporting a 13% increase in February traffic.

Of the 30 Dow stocks, 28 were higher. American Express (AXP), up 3.5% to $45.24, and JPMorgan Chase (JPM), up 2.7% to $46.40, were the best performers after Bank of America. The losers were Intel (INTC) , down 0.4% to $21.13, and McDonald's.

Eighty-five Nasdaq-100 ($NDX.X) stocks were higher, led by Cephalon (CEPH), up 3.4% to $57.19. Apple (AAPL), up 0.1% to $355.76, contributed 1 point to the Nasdaq-100's gain today. The index, which tracks the largest Nasdaq stocks, was up 9 points, or 0.4%,  to 2,338.

Stocks making waves

Brown-Forman (BF.B), up 4.8% to $70.67. The maker of Jack Daniel’s whiskey and Finlandia vodka increased its full-year forecast, saying it expects earnings, excluding some items, of at least $3.35 a share. That topped the consensus estimate of $3.31.

Broadsoft (BSFT), up 36.1% to $47.50, the biggest gainer among Russell 2000 ($RUT.X) stocks. The maker of telecommunications software said first-quarter earnings may be as much as 11 cents a share; analysts have been looking for 9 cents. Revenue will be at least $27 million, also exceeding the projections.

Casey’s General Stores (CASY), down 7% to $37.71. The Midwestern convenience-store operator posted third-quarter earnings that missed the Street estimate.

Dick’s Sporting Goods (DKS), up 6% to $39.94. The nation's largest sporting-goods retailer forecast earnings of as much as $1.91 a share in 2011, more than the average analyst estimate of $1.86.

TiVo (TIVO), down 3.4% to $8.75. The digital-video recording pioneer said it will offer $120 million of convertible senior notes due 2016 in a private offering.

Short hits from the markets -- New York close
 
 Tues.  Mon.

Month chg.

YTD chg.
Treasury yields




 





13-week Treasury bill

0.120%

0.100%

-14.29%

0.00%
5-year Treasury note 

2.212%

2.180%

3.51%

9.72%
10-year Treasury note

3.544%

3.497%

3.81%

7.23%
30-year Treasury bond

4.658%

4.608%

3.74%

6.79%
Currencies











U.S. Dollar Index

76.800

76.514

-0.16%

-3.14%
British pound

$1.6158

$1.6213

-0.76%

3.54%
(in U.S. $)











U.S. $ in pounds

£0.619

£0.617

0.77%

-3.42%
Euro in dollars

$1.389

$1.397

0.44%

3.81%
(in U.S. $)











U.S. $ in euros

€ 0.720

€ 0.716

-0.44%

-3.67%
U.S. $ in yen 

82.919

82.290

1.00%

1.91%
U.S. $ in Chinese

6.593

6.553

0.02%

-0.33%
yuan











Canada dollar

$1.028

$1.028

-0.20%

2.44%
(in U.S. $)











U.S. dollar 

$0.974

$0.973

0.23%

-2.34%
(in Canadian $)











Commodities

 

 

 

 
Gold

$1,427.20

$1,434.50

0.92%

0.41%
(per troy ounce)

 

 





Copper

$4.339

$4.327

-2.94%

-2.44%
(per pound)











Silver

$35.658

$35.865

5.08%

15.26%
(per troy ounce)











Wheat 

$7.7975

$8.0075

-4.85%

-1.83%
(per bushel)











Corn

$7.0550

$7.1750

-3.49%

13.33%
(per bushel)











Cotton 

$2.0714  $1.9123  0.97%  43.04%
(per pound)











Crude oil 

$105.02

$105.44

8.30%

14.93%
(per barrel)












24Comments
Mar 8, 2011 4:18PM
avatar

Why don't they just say STOCKS SOAR ON STIMULUS FROM FEDREAL RESERVE POMO and QE2.  Benanke and company dumped another $9 billion into the market at 10AM CST through treasury purchases, that's the only reason this market is up.

 

 

 

 

Mar 8, 2011 1:44PM
avatar
"Headline for Weds" Stocks drop like a rock due to________(fill in the blank).
Mar 8, 2011 2:29PM
avatar
Tomorrow, the market will be un-soared.
Mar 8, 2011 1:59PM
avatar

This is great news. I am going to run  right  out  and let all the newly homeless everything is great. I bet they sleep much better tonight knowing they will not need to share their space with the Wall Street bankers.  Thanks propaganda machine, for that great news!

 

Mar 8, 2011 2:26PM
avatar
Oil prices may be down a little today but the big IF out there right now is Saudi Arabia....if they hold past 3/11 without demonstrations I think oil prices may continue to recede. If SA goes into revolution mode look out below.
Mar 8, 2011 3:53PM
avatar

Secret telling mike, check the ap news tab or cnbc for the latest.  OPEC met officially today and guaranteed a 3.5 million barrel ramp-up in oil production.  while not light sweet crude, the diversified commitment reduces the chance of a concentrated reliance on the Saudis alone, hence the decline in price is due to perceived reduced future risk.

 

as has been said by those in the know below, this could all change tomorrow!

Mar 8, 2011 3:52PM
avatar
Stop buying gasoline now.  It's the only way to keep this disaster in check.  What will they do with it when nobody wants it.  It's time to band together as a nation and say "we're not going to take this crap anymore".
Then as a nation, start using and demanding the use of alternatives.  You can't have it both ways; you can't say "Stop using oil", then say "Don't use alternatives".
Mar 8, 2011 3:50PM
avatar

Both expected and predicted.

 

And lately, I've noticed a trend of the US market following the overseas markets, rather then the other way around.  Just subjective, but its something everyone with skin in the markets should start looking at...

Mar 8, 2011 2:02PM
avatar

Open-mouthed lol mike!! tell it bro.  we are definitely in a side-ways, range-bound, choppy market and it seems the waves go in and out every other day now.  we think that at some point the big "other shoe" is going to drop and create a sudden market pullback or correction.  we'll see.

 

good post.

Mar 8, 2011 2:07PM
avatar
Hot  any other cheers for BF.B? the makers of jack daniels are up big.  these guys have a single-barrel bourbon whiskey that will make you shiver. really good craftsmanship and pride. and not a bad tour to go on while passing through tennessee.
Mar 8, 2011 3:23PM
avatar

Obviously another one of those well thought out strategic plans for a shortage that doesn't even exist........

Mar 8, 2011 8:24PM
Mar 8, 2011 6:19PM
avatar
How often is the fed purhasing treasuries? Once a week? Is it the same day every week? Just curious.

As often as daily, usually at 11 a.m. EST but sometimes in the afternoon as well. It's been 3 or 4 times each week on average - sometimes twice in the same day. They publish a schedule that can be found on the Fed's website. 
Mar 8, 2011 5:55PM
avatar

Hey Jones

 

  How often is the fed purhasing treasuries? Once a week? Is it the same day every week? Just curious.

Mar 8, 2011 1:49PM
avatar
Stop buying gasoline now.  It's the only way to keep this disaster in check.  What will they do with it when nobody wants it.  It's time to band together as a nation and say "we're not going to take this crap anymore".
Mar 8, 2011 2:25PM
avatar
nothing has changed regarding oil issues. So know why are prices going down? There was no reason for them to have gone up except that Gadafhi may has passed gas a few times. The world will come to end someday so shouldn't this cause the price of oil to continue to rise?
Mar 9, 2011 9:43AM
avatar

Do you see the comment, right in the headline? "A big fall in oil is trimmed after analysts boost price estimates." Oil prices were dropping and the ANALysts said whoa, whoa, whoa, we dont want it to drop that much ....what a bunch of money hungry pigs! They need to STFU and find a better hobby.

We could be way better off if we just use the oil we have here in the USA. We have more oil here than almost anywhere on the planet.

By the way did anybody notice that the price went down slightly only after somebody suggested that we tap into our own reserves.

 

hmmmm

Mar 8, 2011 8:01PM
avatar
I guess it was a bad day to try and short the market? Oh well,... it's only play money anyway!
Mar 8, 2011 3:51PM
avatar

Hot  The US uses 362 million gallons of gasoline a day, it's up $1 gallon.  The US is spending $10.6 billon more a month, or $130 billon more a year on gasoline. On July 1st, 2011 the Fed announces that QE 3 will begin tomorrow and  they'll be buying $10 billion a month in US Treasury bills until the price if gasoline goes under $2.50 / gal.  DJIA shoots to 13,000.

Happy days are here again. 

 

Mar 8, 2011 7:04PM
avatar

Hot well jones, you did ask .... that is very far from the only reason the market is up. today was a "breather" or "relief rally" from some unknowns yesterday that are knowns today.

 

over the mid-term, it is important to remember that the "market" is a vast, complex collection of individual, institutional, block, forced, and computerized trades that collectively determine market direction. this is a tick by tick process (based on the last, sometimes individual, trade) of buys, sells, calls and puts. many, many traders and institutional investors (like myself) base our investments on fundamental and technical factors, and not on any Fed intervention.

 

now, QE is high-impact because it helps overseas sales pick up steam, it reduces internal borrowing costs taking the strain off of IRR and P/E somewhat, and it does drive some (key word some) investors out of fixed income and into equities.

 

in the end, QE and POMO have an unquantifiable impact as most investors are in the market for one reason: to make profit over the short or long-term.  with client cash at risk, sometimes tens of millions, for our part i can tell you that these programs have little impact on our buy/sell decision making. 

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