Oil, Retail Stocks Drive Gains

| A WALL STREET JOURNAL ONLINE NEWS ROUNDUP

Stocks picked up some steam on Friday morning, drawing strength from gains in energy and consumer stocks, as some of the pressure on the dollar relented.

At 10:50 a.m., the Dow Jones Industrial Average was up by 61 points. It was supported by gains for Exxon Mobil, up 1.7%, and Chevron, up 1.8%, as oil prices hovered above $60 a barrel. Kraft Foods, Walt Disney and DuPont were also higher.

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The S&P 500-stock index crept up 0.7% as its energy sector gained 1.5% and its consumer-discretionary sector rose 1%. The Nasdaq Composite Index rose 0.5%. The major indexes have moved in a tight range in morning trading.

A smattering of mixed earnings reports helped lure some investors to retailers' shares. Sears Holdings shares rallied 18% after it posted a surprise first-quarter profit amid cost cuts and tighter inventory controls. Gap reported a 14% profit fall, with sales in all four of its divisions falling. Its shares climbed 2%. Teen retailer Aeropostale reported an 81% profit rise as its first-quarter results set a company record; its shares were up about 4%.

The financial sector moved slightly higher after the FDIC seized BankUnited Financial in the 34th -- and largest -- bank failure this year, at an estimated cost of $4.9 billion to the agency's insurance fund.

BankUnited's failure is a reminder of how fragile many banks remain. The U.S.'s 19 biggest banks performed better than expected on government "stress tests" and several large and midsize banks in recent weeks have successfully raised capital through public stock offerings. But officials are still concerned about dozens of banks across the country that made bad bets on real estate, and those troubles will likely continue to ripple through the financial system.

Shares of some smaller regional lenders, including SunTrust Banks, weakend. But many larger banks, including U.S. Bancorp and J.P. Morgan Chase, made modest gains in recent trading.

Investors had stream out of the dollar and Treasurys after Standard & Poor's warning on Thursday that it may cut the credit ratings of the U.K. government raised fears that the U.S. could face a similar threat. But some of that trend was softening by midmorning on Friday

The dollar was down against the euro and the pound but regained some ground on the yen. Like the U.K., the U.S. has borrowed heavily to finance aggressive efforts to turn back the financial crisis.

The benchmark 10-year Treasury yield jumped to 3.43% Friday, a fresh high for the year, as traders geared up for a healthy dose of new Treasurys next week. The 30-year bond touched its high yield for the year, at 4.37%. But in recent trade, Treasurys turned up slightly

LATICONOMICS

Friday, May 22, 2009