US stocks gain despite oil stocks’ free fall

NEW YORK: A free fall in petroleum stocks was the most striking element of an otherwise lackluster week on Wall Street. All three indices finished higher for the holiday-shortened week, although the gains in both the Dow and S&P 500 were modest. Markets were closed Thursday for the Thanksgiving Day holiday and closed three hours early Friday.

The Dow tacked on 18.18 points (0.10 percent) at 17,828.24, while the S&P 500 rose 4.06 (0.20 percent) to 2,067.56. The tech-rich Nasdaq Composite Index jumped 78.66 (1.67 percent) to 4,791.63.

For November as a whole, the Dow rose 2.52 percent, the S&P 500 2.45 percent and the Nasdaq 3.47 percent. Petroleum stocks were on the defensive most of the week as investors warily awaited the Organization of the Petroleum Exporting Countries meeting Thursday in Vienna. OPEC had not been expected to respond aggressively to a roughly 35 percent drop in oil prices since June. But the cartel did even less than many experts predicted, opting not even to promise to stop pumping above its current 30 million barrels per day production ceiling. “OPEC is clearly signaling that it will no longer bear the burden of market adjustment alone and this decision puts the onus on other producers, especially US tight oil to adjust as well,” said Barclays.

On Friday, Dow members ExxonMobil and Chevron fell by 4.5 percent and 5.5 percent, respectively. Also falling were oil services companies like Halliburton (-10.9 percent) and Nabors Industries (-12.9 percent), as well as shale producers Continental Resources (-19.9 percent) and EOG Resources (-7.8 percent). But the oil price drop had an upside, as airline stocks gained on expectations of lower fuel costs and retailers were lifted as the kickoff of the annual holiday shopping season coincided with an OPEC decision that many analysts see as a boost to consumers’ disposable income.

“Lower gasoline prices are assisting in making holiday spending and confidence rather elevated. Even though consumer spending on gasoline is slightly less than three percent of disposable income, it plays a more significant role on consumer mood,” said Chris Christopher, IHS Global Insight.

The National Retail Federation has predicted holiday sales this year will rise to $616.9 billion, a 4.1 percent increase from last year’s level. Holiday sales accounted for about one-fifth of the retail industry’s annual sales in 2013.

Key factors behind the better outlook include a lengthier holiday shopping season compared with last year, when Thanksgiving fell late in the calendar, and better overall economic data. — AFP