Sharp drop in oil prices boosts Dow

A sharp drop in oil prices gave Wall Street a modest relief rally Monday, with stocks edging higher on news that oil production had soared during the month of September.

Investors who have sold stocks for months as oil prices climbed reversed course Monday and started buying as the price of crude declined. While oil topped $55 per barrel in pre-market trading, the latest production report from OPEC — showing crude production last month at 25-year highs — deflated futures trading substantially.

A barrel of crude closed at $53.67, down $1.26, on the New York Mercantile Exchange after reaching $55.33 before the session.

“Oil’s precipitous slide lower and lower is giving investors a little more confidence in equities in an otherwise quiet afternoon,” said Brian Williamson, an equity trader at The Boston Company Asset Management. “I do think there could be some wait-and-see on earnings, since we have so many of them coming this week.”

The good news about oil helped investors overcome 3M Co.’s earnings, which missed Wall Street’s expectations as the company lowered its full-year outlook, blaming the volatile global economy for lower revenues. At least 30 percent of the Standard & Poor’s 500 companies are scheduled to report earnings this week, though another rise in oil prices could draw attention away from the reports.

The Dow Jones industrial average rose 22.94, or 0.23 percent, to 9,956.32.

Broader stock indicators were moderately higher. The Nasdaq composite index gained 25.02, or 1.31 percent, to 1,936.52, while the S&P 500 index was up 5.82, or 0.53 percent, at 1,114.02.

While the major indexes rose, advancing issues did not substantially outnumber decliners on either the New York Stock Exchange or the Nasdaq Stock Market, leading many analysts to wonder whether the rally could be carried through the coming days.

“The price of oil is so important to the market, and who knows what oil is going to do in the short term?” said Don Ross, chief investment officer at National City Investment Management Co. “I think we have some potential to break out to the upside by the end of the year, as long as we can stop oil from going up from here.”

Advancing issues barely outnumbered decliners on the NYSE, where volume came to 1.37 billion shares, compared with 1.65 billion on Friday.

The Russell 2000 index of smaller companies was up 2.81, or 0.49 percent, to 572.23.

Overseas, Japan’s Nikkei stock average fell 0.16 percent. In Europe, Britain’s FTSE 100 closed up 0.08 percent, France’s CAC-40 lost 0.3 percent for the session, and Germany’s DAX index dropped 0.18 percent.