Published: October 12, 2009 12:01 pm      

Jump in crude oil prices helps lift stock market

NEW YORK — Stocks are extending recent gains at the start of a busy week of earnings, nudging the Dow Jones industrial average closer to 10,000.

Major market indicators rose moderately early Monday, including the Dow, which rose as much as 65 points to hit a new 2009 high of 9,929. That's just 71 points away from 10,000, a level not seen in a year. The Standard & Poor's 500 index was just shy of its 2009 high of 1,080.

A weaker dollar drove oil and other commodities higher, giving energy, material and industrial stocks a lift. Stocks also got a boost from a better-than-expected profit report from Dutch company Royal Philips Electronics, which sent Britain's leading stock indicator to its highest level in a year.

Trading on Monday is expected to be fairly light as much of the country observes the Columbus Day holiday. No major economic reports are scheduled and government bond markets are closed.

A flurry of earnings reports, including ones from the nation's largest banks, will occupy the market's attention the rest of this week. JPMorgan Chase & Co. reports on Wednesday, followed by Goldman Sachs Group Inc., Citigroup Inc. and Bank of America Corp. A number of major technology firms, including Intel Corp., Google Inc. and International Business Machines, will also report results this week.

At banks, investors are hoping to see signs that consumer loan defaults, including mortgages, are starting to level off, and will be looking for any potential trouble with commercial real estate loans. Overall, the market wants to see evidence that an economic recovery is under way.

Earnings season got off to a good start last week when aluminum maker Alcoa Inc. reported a surprise profit. That helped lift the Dow to its highest level in a year, giving the index a 4 percent gain for the week, its best weekly performance since July. The Dow now stands less than 100 points away from the 10,000 mark, a level it has not seen since October 2008.

In midday trading, the Dow rose 46.33, or 0.5 percent, to 9,911.27. The Standard & Poor's 500 index rose 7.07, or 0.7 percent, to 1,078.56, while the Nasdaq composite index rose 9.78, or 0.5 percent, to 2,149.06.

Nearly two stocks rose for every one that fell on the New York Stock Exchange, where volume came to a light 371.5 million shares, compared with 411 million at the same time on Friday.

The dollar mostly fell against other major currencies, helping to drive commodity prices higher. A weak dollar makes commodities more attractive to foreign investors. Gold was up about $9 at $1,058 an ounce, while oil prices added $1.58 to $73.35 a barrel on the New York Mercantile Exchange.

Oil prices have risen about 11 percent over the past two weeks, despite evidence that energy supplies remain high. In addition to the weak dollar, cooler than normal temperatures across the U.S. helped contribute to higher prices on Monday.

The dollar has fallen steadily over the past few months, as investors, more upbeat on the economy, take money out of traditional safe-haven assets and put it to work in stocks. The ICE Futures U.S. dollar index, which tracks the dollar against other major currencies, is down 14 percent since early March. The S&P 500 index is up 58.4 percent since then.

Better-than-expected first-quarter results from banks set off the stock market's rally seven months ago, and even stronger second-quarter results helped fortify the rally in July.

Analysts say companies' earnings reports will determine where the market heads next. If results exceed expectations and show companies are making money through sales and not just cost cutting, stocks could continue their push higher.

"There's still room here for equities to move up on the back of better-than-expected results," said Craig Peckham, an analyst at Jefferies & Co. "I don't think that positive surprises are fully priced in."

Still, disappointing earnings could easily upset investors who are looking for reassurance that the economy is growing and lead them to sell stocks.

After two down weeks, the market regained momentum last week after upbeat reports on the service sector and retail sales, as well as Alcoa's earnings. That momentum is likely to pick up when the Dow crosses the 10,000 level, analysts said, especially with the end of the year approaching.

"You have a lot of pressure on portfolio managers to generate returns that are better than benchmarks," Peckham said. "There is not a lot of time to catch up."

Shares of Advanced Micro Devices Inc., which issues results on Thursday, soared after a UBS analyst upgraded the stock to "Buy" and raised his target price and earnings estimates due to expectations for increased growth. Shares gained 35 cents, or 6 percent, to $6.23.

Among energy stocks, Peabody Energy Corp. hit its highest level since last October, rising to as high as $41.91. Recently, the stock traded up $1.38, or 3.4 percent, to $41.45.

Consol Energy Inc. rose to its highest level since last September, touching $51.25. Shares recently rose $1.14, or 2.3 percent, to $50.29.

In other trading Monday, the Russell 2000 index of smaller companies rose 3.19, or 0.5 percent, to 618.11.

Britain's FTSE 100 rose 1.1 percent, Germany's DAX index jumped 1.3 percent, and France's CAC-40 gained 1.2 percent. In Asia, Hong Kong's Hang Seng index finished down 0.9 percent. Japan's market was closed for a holiday.