Wall St. Sees Bright Spots in Negative News

Shrugging off another surge in oil prices and a surprisingly soft reading of economic growth, investors pushed stock prices broadly higher Friday.

The gains capped the first positive week for major market indexes since June.

In oil trading, however, the news continued to be dismal: Near-term crude futures in New York jumped $1.05 to $43.80 a barrel, the highest since futures trading began two decades ago.

Traders blamed continued worries about potential global supply disruptions.

But rising energy prices seem to have lost the ability to shock Wall Street, for the moment.

The Dow Jones industrial average added 10.47 points, or 0.1%, to 10,139.71 on Friday, and gained 1.8% for the week -- the first weekly gain since June 18.

The technology-dominated Nasdaq composite index rose 6.30 points, or 0.3%, to 1,887.36, and was up 2.1% for the week.

The blue-chip Standard & Poor’s 500 index edged up 1.29 points, or 0.1%, to 1,101.72, and rose 1.4% for the week.

More stocks rose than fell on the New York Stock Exchange and Nasdaq on Friday.

In other markets, Treasury bond yields were sharply lower.

The stock market has been depressed in recent weeks by government data and corporate earnings reports indicating the economy had slowed.

On Friday, the government confirmed as much with its report that gross domestic product rose at a 3% annual rate in the second quarter, well below the 4.5% pace of the first quarter.

But Wall Street pros were encouraged by some of the data within the report -- including a sharp jump in business spending in the quarter.

What’s more, fresher economic data on Friday hinted that consumer and business activity might be picking up again.

“At first blush, you look at the second-quarter GDP number and go, ‘Oh my gosh,’ ” said Sam Stovall, chief investment strategist at Standard & Poor’s in New York. “But it’s a little like eating an artichoke: start peeling the leaves and you find something more appetizing inside.”

Essentially, the latest economic data came out to “a wash,” said Liz Ann Sonders, chief investment strategist at Charles Schwab in New York.

The best news in the GDP report, she said, may have been that business capital spending rose at an 8.9% annual rate in the quarter, up from a first-quarter rate of 4.2%. That boosted investors’ hopes for a sustained economic expansion.

Meanwhile, the University of Michigan on Friday said its consumer confidence index for July rose to 96.7 from June’s 95.6. The reading was above expectations.

A separate report showed a jump in Chicago-area manufacturing activity in July.

Sonders said that although oil prices above $40 a barrel are a “huge headwind” facing the economy, they have been offset by payroll and income growth and by rising corporate earnings.

Motorists and investors seem to be coming to grips with oil in the $40s, Stovall said, but he cautioned that if oil were to spike past $50 a barrel, the economy could get walloped and the stock market would feel it.

“There would be a very big crimp on consumer spending that would act as its own interest rate hike,” Stovall said.

On Friday, the upward pressure on oil stemmed in part from continuing worries about Russian crude production. The nation’s largest oil firm, Yukos, is facing financial and legal woes.

Fear that a terrorist attack in the Middle East could disrupt that region’s production also is keeping prices high.

Among Friday’s highlights:

* The weaker-than-expected GDP report encouraged some investors to buy bonds, driving yields lower. The 10-year Treasury note yield fell to 4.47% from 4.57% on Thursday.

* Semiconductor equipment maker KLA-Tencor climbed $2.42 to $41.23 after reporting better-than-expected earnings, and helped lift other chip stocks.

* In the biotech sector, Gilead Sciences soared $5.14 to $64.64 after reporting a jump in profit, fueled by sales of its AIDS medicine.