Tuesday, Jul 03, 2012

--Stocks advance, led by energy shares amid oil price surge

--European markets higher on hopes of central bank easing

--Factory orders rebound more sharply than expected

 

   By Matt Jarzemsky 

 

NEW YORK--Energy shares surged alongside a rally in oil prices, leading stocks higher in a shortened session ahead of the Independence Day holiday.

The Dow Jones Industrial Average climbed 49 points, or 0.4%, to 12920 in midday trade. The Standard & Poor's 500-stock index added seven points, or 0.5%, to 1372. The Nasdaq Composite rose 21 points, or 0.7%, to 2972.

Energy shares led advances in six of the S&P 500's 10 sectors as oil prices rallied on revived tensions over the Iranian nuclear program and renewed speculation about more central-bank easing. Drilling contractor Helmerich & Payne jumped 5.7% while oil and natural gas producer Pioneer Natural Resources climbed 6%, among the index's biggest advances.

"The driver is definitely energy stocks," said Stephen Guilfoyle, U.S. economist at New York brokerage Meridian Equity Partners. "A couple of things happening in that space are pushing oil higher and taking energy shares with it."

Expectations for stimulus from the European Central Bank, which meets Thursday, were likely leading to some stock buying, he added.

Stocks extended gains after the Commerce Department reported orders for manufactured goods rose 0.7% in May, topping economists' average projection for a 0.1% increase, according to a Dow Jones Newswires poll. April's reading, though, was revised to a sharper decline than initially reported.

"Factory orders looked a little bit better," said Daniel Morgan, senior portfolio manager at Synovus Trust, which oversees $9.1 billion. "No bad news is good news, and you haven't got a lot of participants in the market, with the early close."

Consumer discretionary shares lagged behind after Redbook Research's national chain store sales reading for May was lower than forecast. The International Council of Shopping Centers trimmed its monthly forecast for retail chain store sales as it and Goldman Sachs reported such sales edged up 0.2% in the week ended Saturday. Home Depot dropped, pacing declines among Dow components.

The stock market closes at 1 p.m. EDT ahead of Wednesday's Independence Day holiday.

In Europe, the Stoxx Europe 600 jumped 1% on continued hopes that the European Central Bank will cut its key interest rate later this week. Adding to investor expectations, May producer prices in the euro zone were up 2.3% from the same month a year ago, the smallest year-over-year increase since March 2010.

Spain's IBEX 35 index rose 1.3% as jobless claims in the country fell 2.1% in June, the third consecutive monthly drop.

Asian markets were mostly higher, with Japan's Nikkei Stock Average rising 0.7% and China's Shanghai Composite adding 0.1%. Australia's S&P ASX 200 eased 0.1%, after the country's central bank left its key interest rate unchanged.

In the corporate arena, U.S.-listed shares of Barclays fell 1.7%. The U.K. banking giant's chief executive, Robert Diamond, resigned as a result of an interest-rate manipulation scandal.

M*Modal jumped 8.4% after maker of voice-recognition software for the medical industry agreed to be acquired by J.P. Morgan Chase's private-equity arm for about $820 million.

Rosetta Resources gained 7.5% after S&P Dow Jones Indices said it would add the oil-and-gas-production company's stock to the S&P MidCap 400 index to replace Catalyst Health Solutions, which is being acquired by SXC Health Solutions.

Write to Matt Jarzemsky at matthew.jarzemsky@dowjones.com

(END) Dow Jones Newswires

July 03, 2012 12:18 ET (16:18 GMT)