By Peter McKay
Energy stocks led a steady market rally Friday, spurred by a
rally in oil prices over $85 a barrel and an upbeat outlook from
Schlumberger.
The Dow Jones Industrial Average (DJI) rallied steady from just
before midday through the close, ending with a gain of 69.99
points, or 0.6%, at 11204.28, boosted by a 1.8% gain in Chevron
(CVX). Merck (MRK) was up 5% after calming investors' anxiety about
the effect of the U.S. health-care overhaul on its profits, and
American Express (AXP) moved higher by nearly 2.7% after a strong
earnings report late Thursday.
Investors grew more optimistic about the U.S. economy following
a Commerce Department report showing that sales of new homes in the
U.S. posted their largest year-over-year increase in nearly five
years.
Commodity traders bet on an improving outlook for oil demand,
pushing crude futures up $1.42 to settle at $85.12 a barrel in New
York. Long-dated contracts suggested even stronger prices later in
the year, including a move above $90 by December.
"The commercial side of the market is getting involved," GA
Global Markets broker Tony Rosado said. "They haven't seen
conditions as positive as these in nearly two years."
Schlumberger (SLB) was up 6.6% after it announced a 28% decline
in first-quarter earnings but forecast a full-year turnaround.
Smith International (SII), which is due to be acquired by
Schlumberger in a deal pending regulatory approval, was up
7.1%.
Worries about Greece's finances kept a lid on the market's gains
but didn't derail the generally optimistic mood that pervaded the
market all week. Traders remained focused on the first-quarter
earnings season on Wall Street, which has provided far more
pleasant surprises than bad.
"I think the tone of the markets, moving just a little higher
day by day since the start of the earnings season, is a good
thing," said Brian Belski, chief strategist at Oppenheimer Asset
Management. "Investors are being less reactionary, buying companies
that are showing consistency in their numbers."
The dollar weakened against the euro after Greece Prime Minister
George Papandreou formally asked to tap a 45 billion ($59.9
billion) European Union-International Monetary Fund aid package,
after soaring borrowing costs were seen as making it nearly
impossible for the country to meet its funding needs on the open
market. However, investors warned that pressure in the euro zone is
likely to persist given key uncertainties about the rescue
package.
Among stocks to watch, Microsoft (MSFT) declined 1.4%. The
company's quarterly profit rose 35%, largely due to sales of the
latest version of its Windows operating system, but investors grew
concerned over a lower-than-expected figure on total deferred
revenue.
Travelers (TRV) slipped 0.8% as an improvement in investment
income at the insurer was offset by a spike in catastrophe costs
tied to snowstorms on the U.S. East Coast and the earthquake in
Chile.
The Nasdaq Composite (RIXF) rose 0.4%, held in check by a 4.3%
decline in Amazon.com (AMZN) after the retailer posted strong
first-quarter earnings accompanied by cautious guidance for the
current quarter. The Russell 2000 rose 1%.
Treasury prices fell. The benchmark 10-year note (UST10Y) was
off 11/32 to yield 3.821%.