Stocks close higher on commodities rally
Following a strong show on Friday, the Dow rose 45 points, led by oil and precious metals
In this May 6, 2011 photo, Mathias Roberts, right, of Bank of America Merrill Lynch, and William Bott of Barclays Capital work on the floor of the New York Stock in New York. Swooning bank shares contributed to a drop in European stock markets on Monday, May 9, as investors fretted over whether Greece will need a second financial bailout in just over a year.
Henny Ray Abrams / AP
By Abby Schultz and JeeYeon Park, CNBC.com
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Stocks closed modestly higher as oil and precious metals staged a strong comeback, sending prices in the energy and materials sectors higher.
The Dow Jones Industrial Average rose 45.94 points, or 0.4 percent, to close at 12,684.68, after a better-than-expected April jobs report helped stocks bounce back on Friday following four days of losses.
DuPont was among stocks leading the blue-chip average higher despite news that an activist investor raised its stake in Danisco, which would jeopardize DuPont's bid for the Danish company.
The S&P 500 rose 6.09 points, or 0.45 percent, to close at 1,346.29, while the Nasdaq rose 15.69 points, or 0.6 percent, to close at 2,843.25. The CBOE Volatility Index, widely considered the best gauge of fear in the market, sank to nearly 17.
Among key S&P 500 sectors, energy and materials gained, while financials fell.
"It's all due to the rebound in precious metals and energy," said Peter Cardillo, chief market economist at Avalon Partners.
News before the market opened that Standard & Poor's was downgrading Greece to near-junk status sent the dollar higher, and pressured stocks. But that sentiment reversed around mid-morning, and the dollar traded lower against a basket of currencies by afternoon.
Commodities strengthened because "geopolitical concerns are still very much in place," Cardillo said. "There’s no signs of the global economy weakening where we’d see demand slack off..and so I think the fact precious metals had gotten ahead of themselves, and wound up in more speculative hands, is basically what caused the reversal."
Oil prices rebounded as U.S. light crude rose 5.53 percent to close at $102.55 a barrel, while in London, Brent crude climbed 6.2 percent to close at $115.90.
Gasoline futures also skyrocketed, rising more than 6 percent, as investors fear flooding could have an impact on supplies.
More than 90 percent of all energy stocks gained as oil recovered, including shares of Baker Hughes, which also benefited from an upgrade by Barclays to "overweight" from "equal weight." Diamond Offshore advanced after Duncan-Williams raised the firm to "buy."
The uptick in oil prices hit airline stocks hard, as usual, as AMR, US Airways, and Delta Air Lines, among others, all declined.
Precious metals also bounced up, with silver gaining 5.2 percent on Monday to close at $37.11 an ounce, while gold closed up about 0.8 percent to 1 percent.
