The stock market edged higher Wednesday as investors continued to focus on the likelihood of a U.S.-led attack on Syria. Energy stocks rose sharply as the price of oil increased to the highest in more than two years.
The Dow Jones industrial average rose 48.38 points, or 0.3 percent, to close at 14,824.51. The Standard & Poor's 500 index gained 4.48 points, or 0.3 percent, to 1,634.96. The Nasdaq composite rose 14.83 points, or 0.4 percent, to 3,593.35.
The quick rise in the price of oil has caused investors to worry. Costlier oil almost always translates into higher fuel expenses for businesses and consumers, weighing on consumer spending and the economy. While Syria produces little oil, a regional conflict in the Middle East could lead to supply disruptions in an area where half the world's proven oil reserves lie.
"When you add it all up -- the problems in Libya, Egypt, Syria -- you're looking at 3 million barrels a day in potential production outages," said Nick Koutsoftas, a commodities-focused portfolio manager at Cohen & Steers.
Oil rose $1.09, or 1 percent, to $110.10 a barrel, the highest price since May 2011. It went as high as $112 a barrel overnight.
Energy companies were the biggest gainers in the S&P 500. Marathon Oil rose $1.22, or 4 percent, to $34.60 and Dow component Chevron climbed $3, or 3 percent, to $121.81.
While the selling in stocks appears to have abated for now, the overall trend for the market has been down over the last couple of weeks. The S&P 500 has lost 4.4 percent since reaching an all-time high on Aug. 2, while the Dow is down 5.3 percent. Fund managers said investors will have little reason to enter the market until next week's employment report or until the Federal Reserve holds its mid-September policy meeting.
"You may be watching stock prices, but you're not placing any orders in this market," said Chris Hyzy, chief investment officer at U.S. Trust.
Before Syria grabbed the headlines, the focus had been on the Federal Reserve and whether the central bank was going to pull back on its massive bond-buying program, which has kept interest rates extremely low.
If oil prices remain at these elevated levels, the Fed may have to delay easing back on its bond purchases, said Quincy Krosby, market strategist with Prudential Financial.
"The Fed would see higher oil prices, particularly if they linger at these higher levels, as a definite hindrance to employment and consumer spending," Krosby said.
Hyzy said oil would have to rise above $125 a barrel before it has a noticeable impact on consumer spending. Cohen & Steers' Koutsoftas said he believes the U.S. consumer has gotten used to higher fuel costs, and oil would have to go to $150 a barrel before it might impact consumer behavior.
The Syria standoff comes during what is typically a quiet week for stocks. There is little economic data being released and only a handful of corporate earnings. It's also the week before Labor Day, when many on Wall Street are on vacation. Volume on the New York Stock Exchange on Monday was the lowest of any full day of trading this year.
The next big day for the market will come next week, when investors get the August jobs report on Sept. 6, Hyzy and Krosby said.
In corporate news:
— Zales soared $2.67, or 30 percent, to $11.63 after the jewelry store chain reported full-year income of 24 cents per share, well ahead of the 17 cents per share analysts expected.
— Avago, an electronics maker, rose $1.73, or 5 percent, to $38.28. The company earned 74 cents a share in its latest quarter, beating the 68 cents expected by financial analysts.
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