US stocks end higher as oil falls sharply

Source: Agencies  |   2008-6-20  |     ONLINE EDITION

STOCKS ended a back-and-forth session with a modest advance yesterday as a sharp drop in oil prices helped counter renewed concerns about the strength of the economy.

Oil fell nearly US$5 per barrel after China announced plans to raise caps on gasoline and diesel fuel prices, a move that could ease global demand. The pullback in oil was welcome after weeks in which rising prices have pinned down investor sentiment with fears that the run-up would force businesses and consumers to curb spending.

But worrisome comments from Citigroup Inc. perhaps damped some investors' spirits. The bank warned that a "substantial" amount of write-downs on bad debt are still to come. The comments from Citi's chief financial officer, Gary Crittenden, sent Citigroup shares lower and at times weighed on the financial sector. Citi was among the steepest decliners of the 30 stocks that make up the Dow Jones industrial average.

But while Citi's comments about faltering debt renewed worries about credit markets, the drop in oil seemed to encourage some investors to buying stocks.

"It really seems to be a tug-of-war between the good news and the bad news, or the not-as-bad news and the terrible news," said Jennifer Ellison, principal with wealth management firm Bingham, Osborn & Scarborough in San Francisco. "I think it's going to be hard for the market to find a trend when there is still this undercurrent of bad economic data and negativity in the financial sector and the high price of oil."

The Dow rose 34.03, or 0.28 percent, to 12,063.09. The Dow traded below the 12,000 mark in Wednesday's session for the first time since mid-March and sank below it again in trading Thursday. But some investors appeared encouraged that the blue chips closed above that level both Wednesday and yesterday.