- The Washington Times - Wednesday, August 18, 2004

NEW YORK (AP) — Investors shrugged off rising crude futures yesterday to capture attractively valued shares, sending the Nasdaq Composite Index up 2 percent ahead of Google Inc.’s much-anticipated initial public offering of stock. The Dow Jones Industrial Average rose more than 110 points.

Global fears about terrorism and the resulting premium added to oil prices have rattled investors, exacerbating the volatility usually associated with late-summer trading. Analysts remained upbeat about the market’s underlying fundamentals, however, and the lack of selling pressure led some to express optimism that the rally, which has lasted through four sessions, might hold.

“People have a tremendous capacity to adapt,” said Ken Tower, chief market strategist for Schwab’s CyberTrader. “No story stays in the news forever. So it’s just possible that the market has now fully discounted higher prices of oil and is poised to move higher.”

According to final calculations, the Dow gained 110.32, or 1.1 percent, to close at 10,083.15.

The broader gauges also finished higher. The Nasdaq climbed 36.12, or 2 percent, to 1,831.37. The Standard & Poor’s 500 Index rose 13.46, or 1.2 percent, to 1,095.17.

Despite the strong performance of tech shares, some analysts questioned the conviction behind the buying. Valuations within the sector, which has been severely bruised, have fallen to appealing levels, but that might not be enough to sustain the rally.

“I wouldn’t take today’s move as a change in sentiment, or any positive sign at all,” said Neil Massa, equity trader at John Hancock Funds. “I think we’re still stuck in this trading range. I think investors are truly worried about third- and fourth-quarter profits. They were expecting a robust recovery…”

Investors have grown increasingly worried about inflation in the face of rising energy prices, and a stream of lowered earnings forecasts for the second half of the year has added to that anxiety.

Crude prices surged on worries about lower U.S. inventories and alarm over a Moscow court’s negative ruling against Russian oil giant Yukos. Prices eased briefly when a radical Shi’ite cleric in Iraq accepted a peace plan, but skyrocketed to a new high by the end of the day, closing up 52 cents at $47.27 on the New York Mercantile Exchange.

On Wall Street, however, attention was focused on the Google IPO, which had been put off because of delays in the approval of its registration with the Securities and Exchange Commission (SEC). The SEC formally approved Google’s $1.86 billion IPO after the market closed.

The world’s most popular search engine forecast that its stock would trade between $85 and $95 per share, down from previous expectations that shares would sell for $108 to $135. It also cut the total number of shares to be sold to 19.6 million, down from 25.7 million.

Many analysts were watching other search engines closely to see how they will react when Google emerges as a publicly traded competitor. Yahoo Inc. was up 14 cents at $28.48. Ask Jeeves Inc. added 75 cents to $26.08.

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