Equities eke out gains despite higher oil price

Dow Jones:12,066.80 (+8.78) S&P 500:1,308.44 (+2.11) Nasdaq:2,748.07 (+10.66)

US STOCKS gained yesterday despite another rise in oil prices as investors bet the latest data signalled the economy could absorb expected higher energy costs.

Wall Street see-sawed as oil fluctuated during the day. Brent crude hit a 2½-year high above $117 a barrel in the late morning but later settled at $16.35

“The initial shock waves are gone...We are realising that the world economy is doing okay, that our economy is okay,” said Joseph Benanti, managing director at Rosenblatt Securities in New York.

The day’s rally was broad, with eight out of 10 S&P 500 sectors ending higher. Sectors that are sensitive to energy gained, including industrials up 0.4 per cent and materials up 0.2 per cent. The S&P info-technology sector rose 0.7 per cent.

Economic data was positive, with the Federal Reserve’s Beige Book suggesting economic activity picked up in 2011 and a private survey pointing to strong private-sector hiring.

Stocks have taken their cue from oil since the start of turmoil in the Middle East and northern Africa in January. The fear was that rising oil prices could derail the recovery.

The Dow Jones industrial average was up 8.78 points, or 0.07 per cent, at 12,066.80. The Standard Poor’s 500 Index was up 2.11 points, or 0.16 per cent, at 1,308.44. The Nasdaq Composite Index was up 10.66 points, or 0.39 per cent, at 2,748.07.

Private employers added more jobs than expected last month, an ADP Employer Services report said. The closely-watched and broader US government report on non-farm payrolls is due tomorrow.

Texas Instruments gained 3.3 per cent to $36.14 after JPMorgan upgraded the semiconductor sector, saying an inventory correction was nearing an end and demand appeared to be improving.

Apple shares boosted the Nasdaq after chief executive Steve Jobs surprised investors by personally presenting the new iPad at an event in San Francisco. The stock rose 0.8 per cent to $352.12.

Shares in Yahoo rose 3.3 per cent to $16.63. The company is in advanced talks to leave its Japanese joint venture and free up as much as $8 billion to compete with Google and Facebook. – (Reuters)