Stocks struggle to rise
Strong dollar helps market, but falling commodity prices have a mixed impact.
Stocks clung to gains just before noon Friday, following a choppy morning, as oil and gold prices plunged and the dollar continued its recovery rally.
The Dow Jones industrial average (INDU) added 0.3% over 2 hours into the session and the broader Standard & Poor’s 500 (SPX) index gained 0.3%. The Nasdaq composite (COMP) lost 0.1%.
U.S. light crude oil for September delivery touched a more than three-month low of $111.34 a barrel on the New York Mercantile Exchange, before recovering a bit to trade at $112.16 a barrel, a gain of $2.85. Oil prices have plunged around 23% since peaking above $147 a barrel in mid-July.
Other commodity prices have been falling too, including gold, silver, aluminum and platinum as investors have bet that the global commodities boom will be tempered by sluggish economic growth in the U.S. and overseas.
The same bets have given a boost to the U.S. dollar, which on Friday hit a two-year high vs. the pound and also gained against the euro and yen. (Full story)
COMEX gold for October delivery fell $22.40 to $788.30 an ounce.
While the drop in oil and other commodity prices was good for stock market psychology and for sectors like transportation and retail, it was not good for the underlying stocks, including oil services.
Exxon Mobil (XOM, Fortune 500), Chevron (CVX, Fortune 500), Alcoa (AA, Fortune 500) and a number of gold stocks all declined.
Company news: Ambac Financial (ABK) and MBIA (MBI) led the financial sector higher after Standard & Poor’s took the companies’ bond insurance arms off negative watch and affirmed their AA ratings. The companies remain on “negative outlook.”
In earnings news, software maker Autodesk (ADSK) and retailers Kohl’s (KSS, Fortune 500), Nordstrom (JWN, Fortune 500), Abercrombie & Fitch (ANF) and JC Penney (JCP, Fortune 500) all reported earnings that were better than what analysts expected.
All five stocks rose in the morning, including JP Penney, which also warned that current-quarter results won’t meet forecasts, but the stock gained anyway.
Market breadth was mixed. On the New York Stock Exchange, winners and losers were narrowly mixed on volume of 580 million shares. On the Nasdaq, decliners edged advancers by a narrow margin on volume of 820 million shares.
Economic news: The August N.Y. Empire State index, a regional read on manufacturing, showed a surprise jump in the month vs. forecasts for a further slowdown. The report, released by the New York Fed, rose to 2.8 vs. forecasts for a decline to -5 from a reading of -4.9 in July. Any reading that is positive shows growth, while a negative number shows contraction.
A separate report showed a rise in July capacity utilization that was in line with forecasts and a rise in industrial production that was stronger than expected.
Another report showed the August consumer sentiment index from the University of Michigan rose to 61.7 from an earlier read of 61.2. Economists surveyed by Briefing.com thought it would improve to 62.
Other markets: In global trading, most European markets were higher near the close. Asian markets ended mixed, with the Japanese Nikkei posting gains and other indexes seeing declines.
In the bond market, Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.85% from 3.89% late Thursday.
Retail gas prices dropped overnight, extending a downward trend for a 29th day, according to a survey of gas station credit-card activity.
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