Stocks post gains in February despite oil shock

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Major U.S. stock indexes advanced in February for a third straight month, despite being dented last week by surging oil prices.

Investors hoping for a significant pullback in equities before jumping aboard are still waiting.

The market rallied modestly on Monday, adding to Friday’s gains, as oil prices stabilized. Near-term crude futures in New York closed the regular trading session down 91 cents, or 0.9%, to $96.97 a barrel as Saudi Arabia said it was boosting production to make up for output cuts in strife-torn Libya.

On Wall Street the Dow Jones industrial average (charted at left) rose 95.89 points, or 0.8%, to 12,226.34, as buyers picked up some of the blue-chip names that fell last week, including 3M, McDonald’s and Hewlett-Packard.

For the month, the Dow added 2.8% after rising 2.7% in January. It’s now off just 1.3% from its 2 1/2-year high of 12,391.25 reached on Feb. 18, and is up 5.6% year-to-date.

The broader Standard & Poor’s 500 index, which rose 0.6% to 1,327.22 on Monday, rallied 3.2% for the month after gaining 2.3% in January.

Not surprisingly, energy stocks led the market higher in February. Of the 10 major industry sectors in the S&P 500, energy was up 6.8% for the month. Still, all nine other sectors also gained, with utilities rising the least, up 0.8%.

Another sign of the rally’s breadth this month: After lagging behind blue-chips in January, small and mid-size stocks came on strong in mid-February, and bounced back sharply late last week after the initial sell-off fueled by the jump in oil prices.

The Russell 2,000 small-stock index, which edged up 0.2% on Monday, jumped 5.4% for the month after losing 0.3% in January. It’s up 5.1% this year.

One caution light: Though stocks recovered on Friday and Monday, trading volume was weak both days. By contrast, volume had surged early last week as shares fell.

Market bears say low volume as stocks rise is a sign of a lack of conviction, making the rebound suspect. But you could also make the case that the decline in volume over the last week shows that the urge to sell quickly dissipated as oil prices came down from Thursday’s high of $103.41 a barrel.

-- Tom Petruno