NEW YORK — Wall Street rallied Monday as oil prices fell back and alleviated some investors’ concerns about accelerating inflation. The Dow Jones industrials gained 130 points.
Oil’s retreat helped soothe some of Wall Street’s worries about inflation’s impact on consumer spending. Crude briefly reached a new trading high of $126.40, but investors seemed shy, for the time being at least, to add to oil’s gain of nearly $10 last week.
Light, sweet crude oil fell $1.73 to settle at $124.23 per barrel on the New York Mercantile Exchange.
“This market does seem to be reacting positively to any sort of easing we see in the energy patch,” said Craig Peckham, market strategist at Jefferies & Co.
Investors also got some encouraging news about the credit crisis from London- based HSBC Holdings PLC, which said its first-quarter profits were up from a year ago although the global banking company took a $3.2 billion write-down on subprime- mortgage assets in the United States. The company did echo other assessments that the U.S was likely to fall into recession this year.
JPMorgan Chase chief executive Jamie Dimon said at a conference Monday he estimates the credit-market crisis is 75 percent over but that the recession is just beginning.
Monday’s gains showed investors are still willing to lay some bets, although some market-watchers said Wall Street will still likely see stocks fluctuate as investors try to determine the economy’s direction. Monday’s advance followed a week in which the major indexes all fell as worries about the impact of inflation weighed on investors.
The Dow rose 130.43, or 1.02 percent, to 12,876.31.
Broader stock indicators also rose. The Standard & Poor’s 500 index advanced 15.30, or 1.10 percent, to 1,403.58, and the Nasdaq composite index rose 42.97, or 1.76 percent, to 2,488.49.
The flow of first-quarter earnings reports is beginning to dwindle, so Wall Street will likely require some big news on the economy — such as a sharp reversal in commodities prices — to dislodge the markets from their current position, said Ted Oberhaus, director of equity trading at Lord, Abbett & Co.
“I would expect a range- driven appreciation over the next few months,” Oberhaus said.
