Surging oil prices could not stop indices from edging higher on Thursday, as investors drew strength from the positives in a report from the Federal Reserve. However, unrest in Libya intensified with fresh attacks being launched in the key oil terminal city of Brega. Oil service shares surged higher over bullish indications coming from the energy sector.
The Dow Jones Industrial Average (DJIA) was up 0.1% and ended at 12,079.02. Eight out of 10 of the Standard & Poor 500 sectors ended higher and the index gained 0.3% to close at 1,309.63. The Nasdaq finished at 2,748.07 after gaining 0.4%, helped by a broker upgrade of its semi-conductor sector. But trading volume was at 7.69 billion shares on the New York Stock Exchange, NYSE Amex and Nasdaq, lower than last year’s daily average of 8.47 billion.
The Federal Reserve’s Beige Book presented a positive picture of the economy, suggesting slow but gradually strengthening economic activity in 2011. All 12 of the Federal’s districts posted modest growth and the positives limited concerns over surging crude prices that had been troubling the markets in recent time. Manufacturers and retailers shared success thanks to advancing prices and a private survey reflected strong private sector job hiring. Though retail sales declined in Atlanta, Virginia and Richmond, they were up in the other 10 regions. Manufacturing activity picked up in all districts except St. Louis. The Federal Reserve Bank of Dallas said: “Conditions improved somewhat in the commercial real estate sector, while activity in the housing market remained sluggish.” Though certain costs have been rising for manufacturer and retailers, manufacturers are looking to transfer these costs to customers, while retailers from certain districts have already started raising prices.
The Automatic Data Processing employment survey came in ahead of expectations in February, reporting a surge in the job hiring. The private sector added 217,000 jobs, significantly higher than consensus expectations for a 165,000 increase. For the month of January, private employers hired 189,000 people, upwardly revised from 187,000. Investors now await the Labor Department’s monthly jobs report, scheduled for release on Friday.
Surging crude prices have bothered markets recently and even though prices topping a hundred bucks could not pull markets down, it did limit the gains somewhat. The indices were in for a better finish during the day, but fresh attacks in the second biggest petroleum port in Libya began a negative spell.
Libyan leader Muammar Gaddafi, currently amidst a storm of raging protests, showed signs of his defiant attitude after his supporters carried out a major air and land attack in Brega. Gaddafi loyalists launched an attack here against the protestors and also dropped a bomb near an oil-engineering university, before retreating. Rebels poured in as news of the attack on them spread. They now anticipate that after the first Gaddafi attack on rebel-held land, there are chances of attacks being launched in Benghazi, the seat of the anti-government uprising. Gaddafi’s 41-year rule has largely banked on billions of dollars coming in from oil revenue, but according to reports a majority of the eastern part of oil rich Libya is now controlled by anti-government demonstrators.
US oil supply dropped by 364,000 barrels and gasoline inventories was down 3.59 million barrels, inspiring bullish sentiments in the energy sector. Oil service stocks led gains for the sector neglecting the bearish impact of the losses incurred by Weatherford International Ltd. (NYSE:WFT), which declined 10.1%. Shares of Cameron International Corporation (NYSE:CAM) rose 4.7% and Transocean Ltd. (NYSE:RIG) gained 3.6%.
On an eventful day in the technology sector, Texas Instruments Inc. (NYSE:TXN) gained 3.3% after JPMorgan (NYSE:JPM) upped its rating. Yahoo! Inc. (NASDAQ:YHOO) was up 3.3% and is taking steps to compete with Google Inc. (NASDAQ:GOOG) and Facebook. Steve Jobs, chief executive of Apple Inc. (NASDAQ:AAPL) was personally present to launch the new iPad, the company’s stock ended 0.8% higher. Among the decliners were TiVo Inc. (NASDAQ:TIVO), and Motorola Mobility Holdings, Inc (NYSE:MMI) which shed 9.1% and 3.8%, respectively.
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