Oil price drops and the U.S. stocks upJuly 9th, 2008 - 11:14 am ICT by Amrit Rashmisrisethi
The Wall Street share went higher on Tuesday , the oil prices dropped extremely for the second day.The Dow Jones industrials gained more than 150 points,even all the major indexes went up more than 1 percent. Crude price fell to $5.33 to settle at $136.04 a barrel on the New York Mercantile Exchange.
This week the investors were concerned about the health of government-backed lenders Fannie Mae and Freddie Mac; the two companies’ troubles helped send prices lower.
“A lot of money is flowing into the previous laggards,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research, pointing to financials, health, and housing stocks.
“It really seems like an oversold bounce.”
The Dow rose 152.25, or 1.36 percent, to 11,384.21. Broader stock indicators too rose.
The Standard & Poor’s 500 index rose 21.39, or 1.71 percent, to 1,273.70, while the Nasdaq composite index rose 51.10, or 2.28 percent, to 2,294.42.
The dollar rose to other major currencies, as for the gold prices fell. Shares of Fannie Mae rose $1.62, or 10.3 percent, to $17.39; and Freddie Mac jumped $1.18, or 9.9 percent, to $13.09.
“There was just a little light today that things might be better, a real relief bounce,” said Ryan Larson, senior equity trader at Voyageur Asset Management.
“Things have been beaten up so bad the past couple of weeks that investors are finding a little bit of value down here.”
Anemic economic conditions led Office Depot Inc. to forecast a nearly 10 percent drop in quarterly sales at the office supplies retailer’s North American stores that have been open at least a year. Office Depot shares fell $3.29, or 31 percent, to $7.12.
EMC Corp., tumbled $1.75, or 11.5 percent, to $13.39.
The company is the majority owner of VMware, whose co-founder and CEO is leaving the company.
The Russell 2000 index of smaller companies rose 24.46, or 3.72 percent, to 682.72. Advancing issues outnumbered decliners by a 2 to 1 basis on the New York Stock Exchange, where volume came to 1.73 billion shares.