Markets Choppy as Oil Climbs

Stocks moved between gains and losses on Thursday after new-home sales data disappointed traders and crude oil neared $65 a barrel.

Major indexes have seesawed throughout the session. The Dow Jones Industrial Average was up 15 points at midday amid gains of about 1% for Exxon Mobil and Chevron. J.P. Morgan Chase rose 4% as financial stocks gained. General Motors rose 9% after bondholders supported a plan that would leave them with a 10% to 15% stake in GM. A bankruptcy filing by the auto maker is thought to be imminent.

Market Data Center >

• Most Actives | Gainers | Losers
• New Highs and Lows | Money Flows
• Intraday Futures | Currencies

"Investors are focusing more on faith than fundamentals at this point," said Sam Stovall, a strategist at Standard & Poor's in New York. "You really have to look out to 2010 to feel good about corporate profits and the economy."

Crude prices rose 98 cents to $64.43 a barrel in New York after data showed a bigger drawdown in U.S. energy stockpiles last week than analysts expected.

"This tells us the refiners are getting back to work," said analyst Phil Flynn, of Alaron Trading in Chicago. "They're starting to respond to an increase in demand," both in the U.S. and in China.

Mr. Flynn said overseas buyers are increasingly prone to hoard oil and other commodities in lieu of dollars, which are in greater supply these days thanks to Washington's efforts to prop up the U.S. economy. He believes that trend could help push oil back above $70 by the end of the summer.

Other commodity-related names were strong on Thursday. DryShips was up 4%, while U.S. Steel was up 2.5%.

The S&P 500 was up 0.5%, led by gains in its energy sector, which rose 2.8%. The consumer-discretionary sector, which tends to suffer whenever consumers are facing higher fuel prices, was down 1.5%. The technology-focused Nasdaq Composite Index slid 0.1%, while the small-stock Russell 2000 shed 0.9%.

Data out Thursday were mixed. Sales of new homes edged up by 0.3% in April, but the median price of a new home fell 14.9% from a year ago and the backlog of unsold homes remained high, at about 10 months of supply. Meanwhile, new claims for unemployment benefits eased slightly but continuing claims are still at record levels, and durable-goods demand picked up but a gauge of business spending declined.

Retail stocks turned sharply lower Thursday after new home sales in April rose less than expected and march sales were revised lower. MarketWatch's Andria Cheng reports.

Jack Ablin, chief investment officer at Harris Private Bank in Chicago, said the U.S. economy is at a turning point in which heavy injections of cash into the economy by the Federal Reserve and Treasury aren't yet translating into growth because the money isn't changing hands at a fast enough rate in private-sector transactions.

"In this kind of environment, you have to look at inflation as an eventuality, but it's not around the corner by any means," said Mr. Ablin, who has recently been rotating some of his clients' money from real estate into stocks. He said he will probably begin buying more aggressively soon using cash reserves, looking for a gain in the broad market over the next two or three years.

Treasurys strengthened in recent action, though the yield curve remained steep and prices were off their best levels of the session. The 10-year Treasury note was recently up 15/32, yielding 3.682%.

Overseas, several Asian stock markets were closed, though Tokyo's Nikkei 225 Average edged up 0.1%. The FTSE 100 declined 0.7% in London.