NEW YORK – U.S. stocks snapped a four-day losing streak and finished higher Thursday as falling oil prices and insurer AIG's stronger-than-expected profit outweighed concerns tied to news that British police thwarted a plot to bomb U.S.-bound aircraft.
The Dow Jones industrial average rose 48.19 points, or 0.44 percent, to end at 11,124.37. The Standard & Poor's 500 Index gained 5.86 points, or 0.46 percent, to finish at 1,271.81. The Nasdaq Composite Index advanced 11.46 points, or 0.56 percent, to close at 2,071.74.
The drop in crude prices was a welcome relief as investors had worried that soaring prices would hurt consumer spending and speed up the pace of inflation.
Crude oil futures dropped more than $2 in New York as analysts speculated that airlines may cut back on jet fuel purchases as safety concerns limit air travel.
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Shares of American International Group Inc. (AIG), the world's largest insurer, jumped 3.1 percent, their biggest one-day percentage gain in more than a year. AIG was the biggest positive weight on both the Dow and the S&P 500.
"One of the positive effects that definitely helped this market was the oil price drop," said Larry Peruzzi, senior equity trader at The Boston Co. Asset Management, a Mellon subsidiary.
"The drop in crude takes away some of the concerns about inflation. It definitely helps some of the transport stocks, even though airlines may see some pressure."
U.S. stocks opened lower as investors were rattled by news that British police had derailed a plot to blow up aircraft headed to the United States. By late morning, though, all three major U.S. stock indexes had managed slight gains and momentum picked up in the afternoon.
U.S. crude oil for September delivery fell $2.35 to settle at $74 a barrel, after hitting a session low of $73.90, its lowest since July 31.
AIG shares rose $1.83 to close at $60.32 on the New York Stock Exchange.
Consumer-oriented stocks, including shares of the world's biggest retailer Wal-Mart Stores Inc. (WMT), also contributed to the market's gains, along with shares of companies sensitive to economic cycles, such as diversified manufacturer General Electric Co. (GE).
Wal-Mart shares gained 2.3 percent, or 99 cents, to $44.89 on the NYSE, while GE's stock added 1.2 percent to $32.67.
Stronger-than-expected earnings from No. 2 U.S. discount chain Target Corp. (TGT) increased optimism that consumer spending remained resilient even in the face of near record gasoline prices. Target shares jumped 5.4 percent, or $2.44, to $47.72 on the NYSE.
On the Nasdaq, semiconductor-related stocks led gains, with shares of Research In Motion Ltd (RIMM), the maker of the BlackBerry wireless e-mail device, up 8.1 percent, or $5.54, at $74.12.
Even though airline stocks came under pressure, shares of other transportation companies received a boost from falling crude oil prices, with the stock of package shipper FedEx Corp. (FDX) up 1.9 percent, or $1.88, at $100.28.
The Dow Jones Transportation Averagerose 1.2 percent.
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