Big jumps in U.S. oil refining shares on Friday in reaction to Japan's massive earthquake could soon reverse as traders digest the impact of the disaster
Oil refiners soared, driving up U.S. stocks on Friday, after the earthquake disrupted Japan's refining capacity, and analysts said rebuilding efforts could lift shares of equipment makers.
Howard Ward, a fund manager at the GAMCO Growth Fund, said speculative moves would likely be a short-lived overreaction.
It's generally a mistake for people to be too reactive to a natural disaster like this, he said.
Refiners Valero Energy Corp rose 5.7 percent and Tesoro Corp jumped 6.9 percent.
Short sellers were quick to react to the quake. The ProShares UltraShort MSCI Japan exchange traded fund , which amplifies the reverse of the underlying MSCI Japan index by a factor of two, rose 3.9 percent on over 100 times its usual volume.
Japanese shares traded in New York fell sharply. The Bank of New York Mellon's index of Japanese ADR's <.BKJP> lost 2.2 percent. Toyota Motor Corp lost 2.2 percent to $85.59.
The Dow Jones industrial average <.DJI> rose 74.66 points, or 0.62 percent, at 12,059.27. The Standard & Poor's 500 Index <.SPX> added 10.81 points, or 0.83 percent, at 1,305.92. The Nasdaq Composite Index <.IXIC> climbed 17.73 points, or 0.66 percent, at 2,718.75.
Investors said some industrial shares could benefit in the rebuilding operation in Japan but said information on the extent of damage was still scarce.
The long-term impact is probably going to favor large equipment CAT-type stocks and some of the basic materials, said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. in San Francisco.
Caterpillar Inc shares rose 1.3 percent to $99.70. The Dow Jones industrials index <.DJUSIN> rose nearly 1 percent.
Stocks of global insurers were also in the spotlight on expectations of claims for damages suffered in the quake and tsunami.
Among insurers in the United States likely to have exposure in Japan, Aflac Inc fell 0.1 percent to $55.64 and Berkshire Hathaway Inc rose 0.3 percent to $85.26. The KBW Insurance index <.KIX> edged up 0.7 percent.
Television footage showed a muddy torrent of water carrying cars and wrecked homes at high speed across farmland near the coastal city of Sendai. Japanese media said the death toll was expected to exceed 1,000.
Still, analysts said the images and reports so far did not suggest a major economic and financial disaster. Japan's major cities and manufacturing facilities were not affected by the quake.
U.S. dollar denominated-Nikkei stock futures were down 3 percent, but market players said Japanese market may not suffer too deep a slide going forward because of the lack of impact on major cities and manufacturing facilities. <.T>.
Brent crude futures fell 1.7 percent to below $114, and U.S. crude was off 1.8 percent at about $100.
Also on Friday, investors kept an eye on the Middle East and North Africa as police flooded the streets of Saudi Arabia's capital looking to deter a planned day of demonstrations against the government.
A survey released on Friday showed U.S. consumer sentiment fell to its lowest level in five months in early March as gas prices rose.
The data raised questions about the resilience of U.S. consumers after the Commerce Department separately reported that retail sales rose 1.0 percent in February, the largest gain since October and in line with expectations.
(Editing by Leslie Adler)