Stocks rise moderately as oil continues slide

Wall Street rises moderately as oil prices fall sharply

NEW YORK (AP) — Wall Street rose moderately Friday as the price of oil extended its decline, falling below $112 a barrel and helping to offset a disappointing report on consumer sentiment.

Oil fell on a growing sense that economies around the world are joining the U.S. in a slowdown. The rising dollar, which is gaining strength on economic concerns, contributed to the sell-off in crude and also in other commodities.

Light, sweet crude dropped $3.55 to $111.46 a barrel on the New York Mercantile Exchange.

Oil’s continuing slide was welcome news to investors who have been concerned for months that record-high prices for energy — crude topped out at $147.27 a barrel on July 11 — would force consumers to keep cutting back their discretionary spending.

“Commodities continue to fall off a cliff and the market likes it,” said Greg Church, chief investment officer of Church Capital Management.

Still, there were signs that the consumer remains under pressure. The University of Michigan reported a slightly smaller-than-expected rise in consumer sentiment in early August compared with July. Moreover, earnings outlooks from retailers J.C. Penney Co. and Abercrombie & Fitch Co. on Friday came in below expectations.

In late morning trading, the Dow Jones industrial average rose 60.66, or 0.52 percent, to 11,676.59.

The Standard & Poor’s 500 index rose 5.92, or 0.46 percent, to 1,298.85, while the Nasdaq composite index rose 8.06, or 0.33 percent, to 2,461.73.

Bonds rose modestly. The yield on the benchmark 10-year Treasury note, which moves opposite its price, slid to 3.85 percent from 3.90 percent late Thursday.

The dollar rose against other major currencies. Gold prices sank below $800 an ounce on the Nymex.

Lower oil prices along with bargain-hunting in the financial sector drove the stock market higher Thursday.

Meanwhile, Standard & Poor’s said late Thursday it is no longer reviewing its ratings on the insurance arms of MBIA Inc. and Ambac Financial Group Inc. for a possible downgrade, though it retained a negative outlook on both companies. Bond insurers have been hit hard as a result of the credit crisis. Ambac shares rose 75 cents, or 16.3 percent to $5.31, while MBIA shares jumped 63 cents, or 6.1 percent, to $10.95.

In a positive development, the New York Federal Reserve reported that business conditions for manufacturers have been improving in August. Its index returned to positive territory, indicating expansion — analysts had been predicting a fourth straight month of contraction.

Overseas, Japan’s Nikkei stock average rose 0.48 percent. In afternoon trading, Britain’s FTSE 100 fell 0.75 percent, Germany’s DAX index fell 0.24 percent, and France’s CAC-40 rose 0.27 percent.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

AP | Sara Lepro | Friday, August 15, 2008