Rise in Oil Prices Helps Fuel Stock Gains

Sunday, January 4, 2009

U.S. stocks last week advanced the most since November after fewer Americans filed for jobless claims and oil's biggest weekly increase in two decades lifted energy stocks.

Marathon Oil and Baker Hughes led energy producers, climbing more than 15 percent as the price of crude oil reached $46.34 a barrel, the highest in a month. SanDisk staged the steepest rally among technology companies in the Standard & Poor's 500-stock index, adding 21 percent as investors speculated that it may be acquired. The S&P 500 gained 6.8 percent during the holiday-shortened week, to 931.80. The Dow Jones industrial average added 6.1 percent, to 9034.69. The Nasdaq composite index rose 6.7 percent to 1632.21.

"If we get some letup in risk aversion, we could easily see double-digit" percentage gains in U.S. stocks this year, said E. William Stone, chief investment strategist at PNC Wealth Management. "We only know two things: Typically, the market moves before the economy does, and valuations are reasonable."

More than $30 trillion was erased from global equity markets in 2008. The S&P 500 plunged 38 percent, the most since 1937, as the economy entered a recession and the biggest financial firms lost more than $1 trillion on subprime-related loans and securities.

Energy stocks increased the most among 10 S&P 500 industry groups, jumping 9.6 percent. Companies that rely on growing consumer spending rose 8.4 percent, the second-biggest gain. Industrial, financial and technology companies advanced more than 7 percent and every group added at least 3.8 percent.

Crude futures gained 23 percent last week, the most since August 1986, as the conflict in Gaza increased concern that Middle East supplies would be cut and Russia curbed natural-gas shipments to Ukraine. Oil fell 54 percent last year, the first annual drop since 2001.

The Labor Department said new jobless claims were depressed by the shortened Christmas workweek even as the total number of people collecting benefits reached a 26-year high. There were 492,000 new claims for the week ended Dec. 27, below the 575,000 average estimate of economists in a Bloomberg survey.

The Treasury will auction $32 billion of three-month bills and $22 billion of six-month bills on Monday. They yielded 0.11 percent and 0.32 percent, respectively, in when-issued trading. The Treasury will sell $16 billion of 10-year bonds on Thursday. They yielded 2.37 percent.

-- Bloomberg News

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