Dow jumps 181 despite crude's new high
Crude jumps to $78.23 because OPEC's production boost may not be enough to meet global demand. GM shares shoot up after it says it may not need as many incentives to sell cars. Countrywide may need another bailout.
MoreCrude oil shot up to a record $78.23 a barrel in New York today, breaking the old record of $78.21, set on July 31, as even as the Organization of Petroleum Exporting Countries agreed to boost production by 500,000 barrels a day.
Meanwhile, the Dow Jones industrials rallied for a gain of nearly 181 points, or 1.4%, to 13,308. The Nasdaq Composite Index soared more than 38 points, or 1.5%, to 2,597, and the Standard & Poor's 500 Index rose nearly 20 points, or 1.4%, to 1,471.
The Dow had its best gain since Aug. 29, when it soared 247 points or 1.9%. With today's rally, the Dow has regained 53% of its loss between its July 19 peak and midday low on Aug. 16. The S&P 500 has regained 55% of its loss, and the Nasdaq has reclaimed 60% of its loss.
Today rally, on the sixth anniversary of the Sept. 11, 2001 terror attacks, was a broad rally with 29 of the 30 Dow stocks and 441 S&P 500 stocks showing gains. Some of the buying may have been a show of support to commemorate 9/11.
Crude moved higher because traders don't believe OPEC's extra production is enough.
"We are going to need more than 500,000 barrels to meet rising demand," said Tom Bentz, a broker at BNP Paribas in New York, told Bloomberg News.
Crude also moved higher because traders expect the Federal Reserve to cut interest rates next week, which would help the economy. The Fed's Federal Open Market Committee meets Sept. 18.
OPEC, meeting in Vienna, Austria, agreed to boost production to 27.2 million barrels a day, Kuwait's acting oil minister, Mohammed Abdullah al-Aleem, told reporters. The 10 OPEC member countries with production quotas were already pumping more than the old official quota of 25.8 million barrels a day. (Angola and Iraq currently don't have production quotas.)
The jump in oil prices translated into higher prices for energy stocks. The Amex Oil Index ($XOI.X) was up 1.4% to 1,388. The Philadelphia Oil Service Sector Index ($OSX.X) rose 1.5% to 283.
Dow component ExxonMobil (XOM, news, msgs) jumped 2.5% to $86.94 and added nearly 17 points to the Dow's gain. Chevron (CVX, news, msgs) added 1.8% to $88.59.
Crude oil had been rallying in recent weeks on refinery breakdowns, hurricane worries and terrorist attacks on pipelines in Iran and Mexico.
The increase was being felt at the pump. The national average of regular gasoline was $2.814 a gallon, AAA said today, down slightly from Monday but up from $2.777 a month ago.
While crude jumped, so, too, did gold, hitting $721.10 in New York today. So far in September, gold is up 5.8%.
Gold is rising as the U.S. dollar falls. The greenback was down against the pound, the euro and the Japanese yen today. The U.S. dollar index, a measure of the dollar against the value of a basket of currencies, fell to 79.50 in New York. It's down 2.5% this quarter and 4.5% this year. The dollar is down 4.9% against the euro on the year. |
