Stocks turn higher after an early drop

ByABC News
February 27, 2012, 11:54 AM

— -- NEW YORK (AP) U.S. stocks turned around Monday heading again for some of their highest levels in three and a half years.

Earlier, the Dow Jones industrial average, the broader Standard & Poor's 500 index and the Nasdaq composite index all opened lower.

On Friday, the S&P 500 closed at its highest level since June 2008. And last week the Dow climbed above 13,000 several times. It has not closed above 13,000 since May 2008.

The price of oil has weighed on stocks. Oil has risen 14% in the past month alone, and closed on Friday above $109, its highest point since May. A strengthening economy and higher tensions with Iran have boosted oil prices.

But some economists and many investors are worried that if oil prices rise too fast, and gasoline prices along with them, they will stifle the economic recovery. The price of oil fell more than $1 on Monday to $108.68 in New York trading, offering some hope of a pullback in prices.

Government figures show that growth in demand for crude oil has slowed in the U.S. from a year earlier, although some oil traders are betting a strengthening economy will eventually boost consumption.

All 10 industry groups in the S&P 500 were down, led by a 1.2% drop in financial stocks.

The drop in U.S. stocks follows similar declines at stock markets overseas. In London, the FTSE 100 index fell 1.1%. Germany's DAX gave up 1.7%, and the CAC-40 in France fell 1.5%.

The European debt crisis is also still a lingering concern. Talks in Mexico over the weekend at a meeting of the G-20 nations' finance ministers and central bank heads pointed to the need for the European Union to add billions in funds designed to stabilize the situation and calm markets.

Earlier in Asia, Japan's Nikkei 225 index ended down 0.1% at 9,633.9, giving up gains posted earlier in the day. Hong Kong's Hang Seng fell 0.8% to 21,217.86 and South Korea's Kospi lost 1.4% to 1,991.16.

There was positive news in housing. The number of Americans who signed contracts to buy homes rose 2% in January to the highest level in nearly two years.

The rise in the index tracked by the National Association of Realtors supports the view that the housing market is gradually coming back.