The stock market bounced back today after crude oil prices rolled back from their peak and new polls showed consumer confidence is the highest it's been in three years.
Crude oil plunged by more than $2 a barrel--its biggest drop in eight weeks--as twitchy traders backed off from the heavy buying that had driven oil prices to record highs over the past three days.
Part of Wall Street's recovery may have been from the flow of "hot money" out of oil and back into stocks. Traders looking for quick profits have been jumping back and forth between the stock and energy markets recently. They've been riding up oil prices until they seem to be peaking, then selling out and switching to stocks in hope of catching a rebound rally when stocks gain in response to plunging petroleum prices.
Today, that move worked very well, with the Dow Jones industrial average delivering its biggest gain in more than a month as oil prices sank.
The Dow closed up 115 points at 10,405.63. The Standard & Poor's 500 stock index climbed 11 points to 1,201.57. The Nasdaq Stock Market composite index gained 25 points to 2,069.89.
The big improvement in consumer confidence shown in today's poll by the Conference Board was another hint that maybe oil prices aren't as much of a problem as some investors think.
Economists argued that the poll shows consumers don't seem to be that concerned about record prices of gasoline, heating oil and other petroleum products.
Interpreting the Conference Board data to mean consumer spending will improve, boosting sales at big retailers, chain store stocks rose today, led by Wal-Mart. (The death of founder Sam Walton's son John in an ultralite plane crash will have no impact on Wal-Mart, analysts decreed.)