Forbes.com
Markets Brief
Oil Retreat Sets Stocks Free
Steve Schaefer, 07.16.08, 4:20 PM ET
Wednesday was a day for the downtrodden on Wall Street, as beaten-down sectors led a sustained rally and energy prices retreated for a second-straight day.
Financials, airlines, and automakers, three areas of the market that have been battered for months, were at the fore of the gains, which saw the Dow add 277 points, or 2.5%, to 11,240, the S&P 500 climb 30 points, or 2.5%, to 1,245, and the Nasdaq shoot 69 points, or 3.1%, higher, to 2,285.
Wells Fargo lifted the financial sector, after topping earnings estimates and announcing a 10.0% bump to its dividend. (See "Wells Fargo Surprisingly Upbeat.")
Shares of Wells Fargo surged 33.1%.
Commercial banks Citigroup, JPMorgan Chase, and Bank of America paced the gains among the blue-chips, with BofA leading the way, up 19.1%.
The Financial Select Sector SPDR was up 11.9% heading into the close.
Oil prices faltered again, as worries increase that a weaker U.S. economy may put a crimp in demand. Crude dropped $4.77 to settle at $134.60 a barrel, well below its record high above $147.00. (See "Falling Oil Buoys Bonds.")
The fall helped lift oil-sensitive stocks, particularly the airline sector and the U.S. auto-makers.
Delta Air Lines was up 28.4% heading into the close, thanks in large part to a strong earnings report. The carrier recorded a sizable net loss, but beat analyst expectations and earned 35 cents a share when excluding a special charge.
Northwest Airlines, which is set to be acquired by Delta in a deal that was expected to kick off widespread consolidation that has not materialized, gained 31.4%.
General Motors was showing the single biggest advance on the Dow, jumping 16.2%.
On Tuesday GM embarked on a cost-cutting plan designed to boost liquidity by $15 billion through 2009. (See "GM Helps Itself.")
Detroit rival Ford Motor was sharing in the rally, soaring 17.9%.
Wednesday's advance came despite another worrisome reading on inflation, as the Labor Department's consumer price index climbed 1.1% in June. Even excluding food and energy prices, the figure was 0.3%, still higher than expected. (See "U.S. Inflation Heats Up.")
Still, the minutes from the June 24-25 FOMC meeting showed the Federal Reserve is focused on inflation and will likely have a tightening bias when it makes its next move on monetary policy.
The central bank held its key short-term interest rate steady at 2.00% when it met in June.
http://www.forbes.com/markets/2008/07/16/briefing-closer-oil-markets-econ-cx_ss_0716markets41.html
