Europe’s worsening debt crisis and weak Japanese exports raised concerns that the world’s major economies were flagging. Oil jumped above $100 per barrel, helping to turn energy stocks higher.
Energy companies in the the Standard Poor 500-stock index rose 1.4 percent. Cabot Oil and Gas Corp. led the index higher, rising 6 percent. Higher prices for other commodities including copper and silver helped send material company stocks higher. Freeport-McMoRan Copper Gold rose 2 percent.
The Dow Jones industrial average rose 62.40 points, or 0.51 percent, in midday trading. The Standard Poor index rose 7 points, or 0.53 percent. The Nasdaq composite rose 21.03 points, or 0.77 percent, to 2,761.
On Wednesday, Japan’s government reported that the country’s exports fell by 12.5 percent in April after the March 11 earthquake and tsunami caused factories to close, and forced manufacturers to stop production. Japan’s auto shipments were particularly hurt, falling by 67 percent.
The report added to concerns that the global economy is a long way from health
At the same time, the drop in Japanese exports affected demand for durable goods in the United States. The Commerce Department said Wednesday that companies ordered fewer computers, heavy machinery, cars, airplanes and other durable good from factories in April. The 3.8 percent drop was the biggest in six months, reflecting a decline in business investment in the United States. The weakness was probably made worse by businesses ordering fewer vehicles and car parts from Japan.
Meanwhile, Greece’s government and opposition party failed late Tuesday to reach consensus on how to control the country’s debt problem, adding to the uncertainty around Greece’s financial future. Many analysts believe Greece will eventually have to restructure its debt, but what form that will take is unclear.
A Greek debt default could have a domino effect, denting the credit-worthiness of larger European economies and hampering the world economy.
Stocks had been on a steady climb since last August before dropping steeply in March after the Japanese catastrophe shocked global financial markets. Encouraging corporate earnings sent stocks back up in April, but markets have stalled in the past three weeks. The SP 500 closed at 1,363 on April 29, its highest level of the year, and has drifted lower ever since.
The price of safe haven assets like gold and 10-year United States Treasurys has risen as traders avoid a stock market they see as volatile. The SP 500 index has closed higher on only three of the last 10 days.
Some analysts say the market may have been rising too far, too fast since the beginning of the year, making stocks seem expensive. The Dow is still up 7 percent for the year. The SP 500 is up 5 percent.
“A pullback in the market is probably healthy,” said Michael Sansoterra, portfolio manager at Silvant Capital Management.
The fertilizer company CF Industries rose 4 percent a day after JPMorgan upgraded the stock, citing the company’s good cash flow and positive predictions for the agriculture industry.
Martha Stewart Living Omnimedia jumped 25.46 percent after announcing that it had hired the Blackstone Group to explore a sale of the company.
Retail stocks are struggling. Polo Ralph Lauren sank 7 percent after reporting its profit fell 36 percent because of higher costs. Costco Wholesale slipped 1 percent after reporting earnings that missed analysts’ estimates.
American International Group fell 4 percent to $28.39 as the United States Treasury Department sold some of its stake in the company. Treasury said it would sell 300 million AIG shares for $29 each, hoping to eke out a small profit. The price was set late Tuesday at the low end of the government’s projected range.The report added to concerns that the global economy is a long way from health.
In Europe, markets closed higher. London’s FTSE gained 0.2 percent, and the DAX in Frankfurt and the CAC 40 in Paris both closed the day up 0.3 percent.
Article source: http://feeds.nytimes.com/click.phdo?i=c8c15dbbdb91311bed2b5f180a44e447
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