NEW YORK Stocks ended higher Monday but well off their peak after crude oil prices pulled off their lows and the Federal Reserve said more banks are tightening lending standards.
The decline in oil since last month has eased investors' concerns about the drag of rising prices on the economy, but its move off its lowest levels Monday deflated a stock market rally that built upon steep gains last week. Light, sweet crude fell 75 cents to settle at $114.45 per barrel on the New York Mercantile Exchange after dipping to $112.72, its lowest price since early May.
The Fed's report reminded investors that the nation's credit situation is still deeply troubled. The central bank said about 75 percent of the banks it surveyed in July had increased requirements for prime mortgages, up from about 60 percent in April. The tighter standards can make it more expensive and difficult for borrowing that could stimulate the economy.
Falling oil prices and the continuing problems in the financial sector have competed for Wall Street's attention in recent sessions, with oil sending stocks higher and credit-related news tending to limit or halt the rallies.
Jim Hardesty, president of Hardesty Capital Management in Baltimore, said the decline in oil will take some pressure off the economy.
"We have a speculative bubble in prices that's giving way to what now I think are more moderate levels," he said, referring to oil's surge higher this year. "I think we can look forward to a resumption of an improvement in equity prices based on still-good earnings coming out of many companies."
According to preliminary calculations, the Dow Jones industrial average rose 48.03, or 0.41 percent, to 11,782.35, after being up more than 130 points. The gains Monday follow the blue chips' 300-point jump Friday.
Broader stock indicators also advanced Monday. The Standard & Poor's 500 index rose 9.00, or 0.69 percent, to 1,305.32. The Nasdaq composite index rose 25.85, or 1.07 percent, to 2,439.95, after names like Amazon.com Inc. jumped $7.58, or 9.4 percent, to $88.09 following release of upbeat comments from analysts.
Other consumer discretionary stocks rose as investors saw the drop in oil as likely to leave more cash consumers' wallets. That's a welcome prospect; consumer spending accounts for more than two-thirds of U.S. economic activity.
Target Corp. rose $2.49, or 5.1 percent, to $51.23, while Starbucks Corp. rose $1.18, or 7.8 percent, to $16.30.
Advancing issues outnumbered decliners by about 5 to 3 on the New York Stock Exchange, where volume came to a light 1.26 billion shares compared with 1.25 billion Friday. Light trading can exacerbate the market's moves.
The drop in oil prices, which have fallen more than $30 from their July 11 high of $147.27, has alleviated some of Wall Street's worries about inflation and its effect on spending. Oil traders on Monday appeared to set aside uneasiness about fighting between Russia and Georgia that had raised the possibility of supply disruptions in the region; they focused instead on a rising dollar and a report from China that its crude oil imports fell significantly in July.
Ryan Larson, senior equity trader at Voyageur Asset Management, said the final moves by oil appeared to turn some investors more cautious, as did the Fed report.
"You see a little steam coming out of equities," he said, pointing to the effect of oil's partial recovery. "People are trying to lock in some moves."
Traders didn't appear surprised that some investors looked to cash in gains. The jump in stocks Friday led the Dow industrials to a run-up of 3.60 percent for the week. The Standard & Poor's 500 index advanced 2.86 percent last week and the Nasdaq composite index added 4.46 percent. It was the best week for the indexes since April.
The dollar, whose recent strength has helped drive oil lower, was mostly higher Monday against other major currencies. Gold prices fell.
Bond prices fell sharply as traders again transferred money to the stock market. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 4.01 percent from 3.94 percent late Friday.
In corporate news, Waste Management Inc. said it was increasing its buyout bid for rival Republic Services by 9 percent to $37 per share. The nation's largest trash hauler is willing to pay about $6.99 billion for Republic Services, which rejected an offer of $6.19 billion, or $34 a share, in July. Waste Management rose 10 cents to $36.11, while Republic rose 19 cents to $35.05.
Calpine Corp. rose 61 cents, or 3.8 percent, to $16.60 after the power producer said it swung to a profit in the second-quarter from a loss a year earlier following an increase in electricity rates and lower costs. The company earned 41 cents per share; analysts expected a profit of 10 cents a share, according to Thomson Financial.
The Russell 2000 index of smaller companies rose 16.76, or 2.28 percent, to 751.06.
Wall Street seemed unfazed by a pullback in China's benchmark Shanghai Composite Index, which fell 5.2 percent Monday after economic figures showed wholesale price inflation jumped to its highest level in 12 years in July.Elsewhere overseas, Japan's Nikkei stock average rose 1.99 percent. Britain's FTSE 100 rose 0.96 percent, Germany's DAX index advanced 0.73 percent, and France's CAC-40 rose 1.04 percent.