USA TODAY US Edition
Gasoline demand report powers stocks
NEW YORK — Stocks edged higher Wednesday after a government report showed stronger demand for gasoline.
Indexes had been lower earlier in the day but rallied after an Energy Department report showed that gasoline consumption continues to grow despite sharp price increases at the pump. It’s a possible sign that motorists have handled higher fuel costs without cutting back.
Economists have been concerned that the recent spike in oil prices could imperil the economic recovery.
Oil prices reached their highest level since Sept. 26, 2008, rising 78 cents to $105.75 a barrel.
Stocks had been weighed down by news that the earthquake and tsunami that hit Japan will be the most expensive natural disaster in history.
Financial stocks were lower after the Federal Reserve rejected Bank of America’s plan to increase its dividend this year.
The Dow Jones industrials rose 67.39 points, or 0.6%, to 12,086.02. The Standard & Poor’s 500 edged up 3.77 points, or 0.3%, to 1297.54. The Nasdaq composite rose14.43 points, or 0.5%, to 2698.30.
The Japanese government estimated that rebuilding costs for the earthquake could be as high as $300 billion. The widespread devastation is expected to drag the growth rate of the Japanese economy down by a half-percentage point this year. Japanese companies such as Toyota and Honda have suspended production at some plants.
BofA fell 23 cents to $13.65 after the Federal Reserve rejected its plan to raise its dividend in the second half of the year. The Fed allowed several major banks to increase their dividends last week after they passed stress tests. Banks slashed their payments to shareholders during the financial crisis to save cash. BofA said it will submit another request to increase its dividend this year.
“This was obviously a disappointment,” says Todd Salamone, research chief at Schaeffer’s Investment Research. “There seemed to be a growing consensus that financial stocks were looking more attractive based on the prospect of dividend increases.”
In the latest bad news on housing, the Commerce Department said sales of new single-family homes plunged to the lowest on record in February, down17% to an annual rate of 250,000. Quotes on your cellphone Send text message to 4INFO (44636) with: iStock ticker (dell) or iF-nd ticker (agthx)