Energy stocks push major indexes higher
BY ASSOCIATED PRESS February 3, 2011 9:34AM
NEW YORK (AP) — Energy companies drove major indexes higher Monday after Alpha Natural Resources made a bid for rival coal producer Massey Energy and Exxon Mobil reported strong earnings.
Alpha offered $7.1 billion in cash and stock for Massey and the nation’s fourth-largest coal producer by revenue accepted it. That sent Massey’s stock up 11 percent in early trading, making it the best performer in the Standard & Poor’s 500 index.
Other major coal companies, including Consol Energy Inc. and Peabody Energy Corp., rose by more than 2 percent.
The Massey deal suggests “maybe coal isn’t dead,” said Kim Caughey Forrest, equity research analyst at Fort Pitt Capital Group. It also raises hopes for similar deals in the future.
Energy stocks also got a lift after Exxon Mobil Corp. reported its most profitable quarter since the record third quarter of 2008. That sent its shares up about 1 percent in early trading.
The Dow Jones industrial average rose 11, or 0.1 percent, at 11,833. The Standard & Poor’s 500 index rose 3, or 0.3 percent, at 1,279. The Nasdaq composite index fell 3, or 0.1 percent, at 2,683.
Treasury prices fell, pushing their yields higher. The yield on the 10-year Treasury note rose to 3.35 percent from 3.33 percent late Friday.
Investors were also encouraged after the Commerce Department reported that Americans increased their spending sharply in December. Consumer purchases for all of 2010 rose at the fastest pace in three years.
But the unrest in Egypt continued, and concerns remained about Egypt’s impact on oil prices, especially if the Suez Canal, a key route for oil tankers and cargo ships, may be closed.
“The market wants to work its way higher,” said Sam Stovall, chief investment strategist of Standard & Poor’s. “The big worry is the unknown — the cascading effects that could occur.”
Oil prices rose 27 cents to $89.61 in morning trading.
Investors will get several additional updates on the economy later in the week, including reports on auto sales, construction spending, factory orders and employment for January.