Roger Volz Comments: Oil Prices Help Boost Stocks - Wall Street Journal

Wall Street Journal, June 29, 2009

An unlikely pair of sectors led the stock market higher Monday, as energy names benefited from higher oil prices, while the consumer sector enjoyed a tentative return of some buyers betting on an economic recovery.

The Dow Jones Industrial Average, which is coming off its first two-week losing streak since early March, recently was up 89 points, or 1.1%, trading at 8527.87.

The two biggest contributors to the average's point move were Exxon Mobil and Chevron, up 2.4% and 1.6% respectively. Other big winners among the blue chips included American Express, Boeing, Merck and Microsoft. Each rose about 2%.

The S&P 500 rose 0.9%. All of its sectors traded higher, led by the consumer-discretionary category, up 1.5%, and energy, up 1.3%.

Money managers are also making last-minute moves as the end of 2009's second quarter on Tuesday draws near. In a phenomenon known as "window dressing," managers often tweak their portfolios before sending out quarter-end statements to clients.

"I think we're seeing a lot of that today," said Roger Volz, director of equities, at BGC Partners in New York. He added: "We've gone right up to several overbought readings on stocks and oil, but we just can't break through. We just seem to be marking time."

Mr. Volz said that the S&P has had trouble breaking through 923 or so, with many automated sell programs triggered each time it gets even a little above that level. It rose as high as 927 on Monday, but has since retreated.

Oil futures rose $1.73 to $70.89 a barrel in New York amid continued violence in Nigeria's main oil-producing region. Traders also digested reports that Organization of Petroleum Exporting Countries and the European Union had agreed in talks that the weakened global economy could support crude prices between $70 and $80 a barrel.

Despite a bullish outlook from many oil traders lately, gasoline prices have been under pressure as U.S. refineries have ramped up to full-scale summer production. That has translated into some relief at the pump for everyday consumers, whose purchases of other goods are often crimped at times when they have to pay more to fill up.

According to the driving club AAA, the average U.S. price of regular-grade gasoline fell every day last week and was down a fraction of a penny at $2.639 a gallon on Monday, though it still remains up 6.1% from a month ago.

Eric Marshall, portfolio manager at Hodges Capital Management in Dallas, said his firm remained out of consumer-discretionary stocks for the most part in 2008, but it has recently been buying a few names in the sector, including Liz Claiborne and Jos. A. Bank Clothiers, as early bets that a rebound is on the way in the U.S.

"We've actually been narrowing down the total number of names that we own in our portfolios," from 100 last year to about 50, said Mr. Marshall. "But if we see a company with a good balance sheet that has some staying power to get to the other side of the valley in the recession, we are willing to put some money to work."

Elsewhere, oil-services provider Enterprise Products was in focus after announcing plans to buy Teppco for $3.3 billion. Enterprise slipped 0.6% in recent action, while Teppco was up 6%.

Though no major economic releases are scheduled for Monday, several important announcements are due later in the holiday-shortened week. They include the June employment report, which will be announced earlier than usual on Thursday, as U.S. markets will be closed Friday in recognition of Independence Day.

The Nasdaq Composite Index was little changed, up 0.4%. Its components Oracle and Sun Microsystems posted gains of more than 2% each despite increased scrutiny by the Justice Department of Oracle's proposed $7.4 billion acquisition of Sun.

The dollar was stronger against the yen and weaker against the euro. Treasury prices were mixed. The 10-year note gained 13/32 to yield 3.481%.

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