Associated Press
Wednesday, July 23, 2008

NEW YORK, July 22 -- Wall Street shook off early doldrums and closed sharply higher Tuesday after another drop in oil prices encouraged investors to set aside concern about the financial sector and go bargain-hunting.

The Dow Jones industrial average rose 135.16, or 1.18 percent, to 11,602.50. The Standard & Poor's 500-stock index jumped 17.00, or 1.35 percent, to 1277.00. The Nasdaq composite index, which was down for much of the session on disappointing tech earnings, ended up 24.43, or 1.07 percent, at 2303.96.

Stocks initially fell on uneasiness about the continuing effect of the housing and credit crises on financial company earnings. Disappointing results from American Express and Wachovia fed those worries.

But a $3 drop in oil -- which took crude's decline in recent weeks to nearly $20 a barrel -- persuaded some investors to wade back into equities.

Even shares in Wachovia, the nation's fourth-largest bank, shot up after tumbling to levels not seen since the early 1990s. The stock was pummeled after the retail bank posted an $8.9 billion loss because of charges and reserves for bad mortgage loans.

The focus on oil's impact on the economy has been so intense that any decline in its price breeds optimism that the commodities run-up might be nearing an end, analysts said. That means, for the moment, corporate earnings reports have lost some of their dominance of the market.

A barrel of light, sweet crude tumbled $3.09 to settle at $127.95 on the New York Mercantile Exchange, down nearly $20 from its record high of $147.27 reached just weeks ago.

Technology stocks were lower early in the session after Apple beat expectations but issued a weaker-than-expected forecast for the current quarter.

Apple fell $4.27, to $162.02.

Texas Instruments fell $4.17, to $24.35, after missing expectations because of a slowdown in orders.

American Express fell $2.91, to $37.99, after missing expectations and setting aside more money to cover souring loans across all its portfolios.

UPS rose $2.65, to $62.11, after saying its profit fell 21 percent on higher fuel costs.