Welcome political stability in Venezuela helped cool oil prices slightly Monday, apparently providing investors with a reason to buy U.S. stocks again.
Crude oil prices moderated only slightly, falling from record high levels attained again in overnight trading.
Helping to assuage supply fears was the victory of Venezuela’s sitting president, Hugo Chavez, in a referendum that sought to recall him from office, a move that could have sent that important oil nation into turmoil.
Stock markets roared to life early Monday and held their gains most of the day, slipping only slightly in the last hour of trading.
The Dow raced higher by 129.20 points, or 1.3 percent, to close at 9,954.55.
The Nasdaq finished at 1,782.84, a gain of 25.62 points and about 1.5 percent.
The S&P 500 also climbed sharply, gaining 14.54 points to end the session at 1,079.34.
The gains came after the New York Federal Reserve Bank reported that factory activity in that state sank sharply last month but that employment was higher.
Also potentially affecting the markets was the report that most major insurance companies indicated that any payouts or losses associated with the devastation from hurricane Charley over the weekend would be within acceptable ranges.
Current estimates put damage from the storm at $10 billion to $15 billion, most of it concentrated in central Florida.
End of Trend?
Oil has reached record price levels repeatedly for the better part of two weeks as worries about supply disruptions in Iraq, South America and Russia combined to drive prices above $46 a barrel for the first time ever.
Oil prices have dominated economic talk of late, taking a backseat only to some high-profile earnings news and the Federal Reserve’s decision to hike interest rates again, which helped the market regain some of the oil-fueled losses.
Most analysts expect oil prices to remain high and some are predicting that gasoline prices in the U.S., which had been falling for weeks, might start moving higher again. This move could further hamper economic growth by sapping consumers’ spending power.