- The Washington Times - Monday, June 7, 2004

NEW YORK (AP) — Optimistic investors bid stocks sharply higher in light trading yesterday, buoyed by the strength of the economy and even ignoring a slight rise in oil prices. The Dow Jones industrial average rose more than 140 points.

Much of Wall Street’s good will was carried over from Friday, when a strong employment report boosted investor confidence. But some analysts, noting that the light volume seen last week was in evidence yesterday as well, wondered how sustainable the rally was.

“The market seems to be going up because there aren’t any sellers around, not because there’s a lot of demand. That has a chance to end badly,” said Richard Dickson, senior market strategist at Lowry’s Research Reports. “Overseas markets are up strongly and oil’s down, and I think what we’re seeing is a little bit of a Pavlovian response to that more than anything else.”

Investors also were cheered by a $4.85 billion merger proposal in the casino industry. With mergers and acquisitions gaining popularity, investors saw the trend as a sign of a stable, healthy economy.

The Dow gained 148.26, or 1.4 percent, to 10,391.08.

Broader stock indicators were sharply higher. The Standard & Poor’s 500 index was up 17.92, or 1.6 percent, at 1,140.42, and the Nasdaq Composite Index rose 42.00, or 2.1 percent, to 2,020.62.

The gains marked an important transition from the heavy sell-off last month. The Dow and Nasdaq had their best close since April 27, and the S&P; 500 last closed above 1,140 on April 23.

The start of trading on the New York Stock Exchange, the Nasdaq Stock Market and the American Stock Exchange was delayed two minutes in a tribute to former President Ronald Reagan, who died Saturday. Most U.S. financial markets will be closed Friday for the national day of mourning.

After remaining low for most of the day, benchmark light sweet crude oil settled at $38.66, up 17 cents a barrel on the New York Mercantile Exchange. The slight rise was largely ignored by investors who have worried about inflation in recent weeks as oil prices climbed past $42 a barrel. If oil prices can remain under $40 per barrel, analysts think that the market’s upward trend may stabilize.

“We’re getting toward a crucial time for the market where we either see a surge in volume and broad-based buying, or we see profit-taking and a further decline in the markets,” said Michael Sheldon, chief market strategist at Spencer Clarke LLC. “If oil prices can keep steady and no new geopolitical problems come up, then we have a chance to break to the upside.”

MGM Mirage Inc. has made an unsolicited $4.85 billion offer to acquire Mandalay Resort Group. MGM would also assume $2.8 billion in debt in what would be the biggest casino industry acquisition in history. Mandalay surged $9.96 to $70.23, while MGM Mirage fell $1.19 to $44.84.

McDonald’s Inc. was down 25 cents at $26.61 after it announced a 7.9 percent rise in same-store sales in May owing to growing market share among fast-food chains.

Wal-Mart Stores Inc. said its same-store sales were tracking at the low end of its 4 percent to 6 percent forecasts. Wal-Mart gained 91 cents to $57.50.

General Motors Corp. rose 89 cents to $47.11 after it said it would spend up to $3 billion in China in the next three years, doubling its manufacturing capacity in the world’s fastest-growing automotive market.

Advancing issues outnumbered decliners by more than 4-to-1 on the New York Stock Exchange, where consolidated volume came to 1.51 billion shares, compared with 1.38 billion on Friday.

The Russell 2000 Index of smaller companies was up 11.15, or 2 percent, at 578.90.

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