U.S. stocks post solid 2nd-qtr gains, energy leads
By Caroline Valetkevitch
NEW YORK, June 29 (Reuters) - U.S. stock indexes rose in the second quarter of 2007, with the Dow industrials putting in the best performance since 2003, thanks to gains in the energy sector and an economy that stabilized.
The Dow Jones industrial average .DJI gained 8.5 percent in the three-month period that ended Friday, It was its best quarter since the fourth quarter of 2003.
The S&P 500 index .SPX rose 5.8 percent, its best quarterly advance since the fourth quarter of last year, and the Nasdaq jumped 7.5 percent, its best since the fourth quarter of 2004.
Energy has been at the forefront of much of the market's gains since stocks bottomed out in July, fueling an advance that drove the Dow to a string of records and the S&P 500 and Nasdaq to multi-year highs.
"With energy, the numbers are staggering in their profits every quarter. You will (see that) again with oil at these prices," said Victor Pugliese, director of listed equity trading at First Albany Corp. in San Francisco.
For the quarter, the energy sector .GSPE jumped 14.3 percent. U.S. crude oil for August delivery CLQ7 rose $1.11 to settle on Friday at $70.68 per barrel, the highest close since Aug. 25, when front-month crude hit $72.51.
The financial sector .GSPF showed the least gains for the quarter, extending its weak performance in the first quarter, as worries about the subprime mortgage market and lending for takeovers hit brokerage shares. News that two hedge funds managed by Bear Stearns Cos. Inc. BSC.N were struggling after making bad bets on risky mortgages contributed to the concern.
UTILITIES SLIP, TECHS REBOUND
The utility sector .GSPU was the only S&P 500 sector to end down for the second quarter, while it fared best in the first quarter.
Shares of utility companies, which attract investors because of their dividends, lost ground as U.S. bond yields rose above 5 percent. The sector was down 1.1 percent for the quarter.
Technology .GSPT stocks and industrials .GSPI were the top-performing S&P 500 sectors after energy, gaining 10.2 percent and 9.2 percent, respectively.
That's a turnabout from the first quarter, when technology, seen as the market's riskiest sector, was the second-worst performer.
"In my mind, the second (quarter) represents some catch-up from the overwhelming view in the first quarter that the economy was weakening and the Fed was going to have to come to the rescue. In the second quarter, that view changed significantly," said David Joy, chief market strategist at RiverSource Investments, in Minneapolis, commenting on why the second quarter was good for stocks.
On Thursday, the Federal Reserve left the benchmark U.S. interest rate at 5.25 percent for an eighth straight meeting, and said it sees moderate economic growth over coming quarters.
Among factors contributing to the latest climb in oil prices, a U.S. government report showed gasoline stockpiles fell last week, just as the country heads into its July 4th holiday, a high demand period.
For a factbox on the S&P sectors quarterly, year-to-date performance, see [ID:N29410005]
