Oil Drop Sparks a Rally

123jump.com Staff
08 Aug, 2008
New York City

U.S. stocks rallied after crude future fell 3% and gold declined. The drop in oil sparked a rally in transportation and consumer stocks. U.S. stocks rose after crude oil futures fell 3.2% or $3.69 to $116.33 and gold declined $12.70 to $865.20. Domtar Corp, the second largest paper producer reported better than expected earnings and forecasted higher profit margins. Hertz Global Holdings fell as much as 8% after it reported lower and earnings forecasted weak results for the rest of the year.

[R]2:30 PM New York – A sharp drop in crude oil futures sparked a rally in stocks.[/R]

U.S. stocks rose after crude oil futures fell 3.2% or $3.69 to $116.33 and gold declined $12.70 to $865.20.

In earnings news, Royal Bank of Scotland reported its first quarterly loss on asset write downs. Domtar Corp, the second largest paper producer reported better than expected earnings and forecasted higher profit margins. Hertz Global Holdings fell as much as 8% after it reported lower and earnings forecasted weak results for the rest of the year. World Fuel Services Corp rose after it reported earnings of 73 cents a share.

Dow Jones Industrial Average rose 291.31 or 2.52% to 11,723.54 and S&P 500 rose 27.32 or 2.32% to 1,293.11.

Stock Movers

Fannie Mae fell 13% or 91 cents to $9.04 after the the troubled housing agency reported worst than expected results and indicated deepening problems in the housing market and for the company. The lender reported a loss of $2.3 billion or $2.54 a share compared to net income of $1.95 billion or $1.88 a share. Fannie also slashed its dividend 80% to 5 cents from 25 cents a share.

Fannie Mae ((FNM)) in the last one year traded as high as $70.57 in October 2007 and as low as $6.68 in July 2008. Based on the yesterday’s closing price the company has a market cap of $8.67 billion.

MBIA Incorporated rose 5.1% to $8.70 after the provider of municipal bond insurance posted second quarter profit and decided not to take additional reserves for mortgage-related guarantees.

MBIA Incorporated ((MBI)) in the last one year traded as high as $68.98 in October 2007 and as low as $3.62 in July 2008. Based on the yesterday’s closing price the company has a market cap of $2.53 billion.

Deckers Outdoor Corporation rose 1.6% to $117. The company that makes Ugg bots and Teva sandals posted profit which was on the high end of the average analyst estimate.

Deckers Outdoor Corporation ((DECK)) in the last one year traded as high as $166.50 in January 2008 and as low as $83.51 in March 2008. Based on the yesterday’s closing price the company has a market cap of $1.53 million.

S&P Movers

Of the stocks in S&P 500 index, 328 increased 166 declined and 6 remained unchanged.

Fannie Mae led the decliners in the S&P 500 index with a loss of 8.14% or $0.81 to $9.14 followed by losses in Southwestern Energy of 4.82% or $1.64 to $32.36, in U.S. Steel Corporation of 4.54% or $6.51 to $137.00, in Williams Cos Incorporated of 4.36% or $1.28 to $28.09 and in Consol Energy of 4.12% or $2.70 to $62.83.

MBIA Incorporated led the gainers in the S&P 500 index with a rise of 13.89% or $1.15 to $9.43 followed by increases in Qwest Communication of 6.71% or $0.23 to $3.66, in Keycorp of 5.09% or $0.55 to $11.36, in Public Storage of 4.63% or $3.71 to $83.82 and in Sprint Nextel Company of 3.98% or $0.31 to $8.10.

Dow Gainers & Losers

Of the 30 stocks in Dow Jones Industrial Average 21 stocks gained, 7 declined and 2 remained unchanged.

Alcoa Incorporated led the decliners in the Dow Jones Industrial Average with a loss of 1.86% or $0.59 to $31.21 followed by losses in Chevron Corporation of 1.26% or $1.05 to $82.38, in Hewlett-Packard of 1.12% or $0.51 to $45.00, in Exxon Mobil Corporation of 0.79% or $0.62 to $76.82 and in International Business Machines of 0.66% or $0.85 to $128.20.

Home Depot Incorporated led the gainers in the Dow Jones Industrial Average index with a rise of 2.29% or $0.56 to $25.04 followed by increases in General Motors of 2.15% or $0.21 to $9.96, in Merck & Company of 1.92% or $0.67 to $35.55, in McDonalds Corporation of 1.62% or $1.00 to $62.86 and in Pfizer Incorporated of 1.25% or $0.24 to $19.45.