- The Washington Times - Tuesday, August 24, 2004

NEW YORK (AP) — Investors all but ignored another substantial retreat in oil prices yesterday, leaving stocks mixed in a listless and lightly traded session. Tech stocks fell in response to a brokerage downgrade of Cisco Systems Inc., while blue chips got a boost from an upgrade of Caterpillar Inc.

Although oil dipped briefly below $45 per barrel during the session, two days of falling prices weren’t enough for cautious investors to get back into the market, despite very attractive prices.

Investors were concerned that oil prices, which topped $49 per barrel late last week but closed down 84 cents at $45.21 on the New York Mercantile Exchange, could advance again. Another sharp rise could raise corporate costs and reduce consumer spending, thus harming third- and fourth-quarter earnings

“Without any real big economic or geopolitical news here, the market’s keying off of oil,” said Jay Suskind, head trader at Ryan Beck & Co. “But we’re in the dog days of August here, so there’s just not going to be a lot of volume or conviction here.”

Many investors were also making few trades leading up to the Republican National Convention, analysts said. They were also holding back as they awaited the government’s employment report for August, expected at the end of next week.

The Dow Jones Industrial Average was up 25.58, or 0.2 percent, at 10,098.63.

Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 Index was up 0.51, or 0 percent, at 1,096.19, and the tech-focused Nasdaq Composite Index lost 1.81, or 0.1 percent, to 1,836.89.

An increase in stock options granted by Cisco Systems Inc. caused UBS to lower its price target for the network equipment maker by $1 per share. Cisco slid 21 cents to $18.97. Tech shares have been closely watched as they begin more thorough accounting of their stock options, a key part of many companies’ compensation for employees.

The market had little reaction to the National Association of Realtors’ existing-home sales report, which showed that 6.72 million units changed hands in July, down 2.9 percent from June and less than economists had expected. Rising consumer prices and a drop in consumer confidence were blamed for the decline. However, it was still the third-best monthly reading on record, showing that consumers were still taking advantage of historically low interest rates.

While the housing data and oil prices were good news, it was difficult for buyers to gather any strength. Echoes of the last bear market have made investors very cautious, especially in low-volume sessions like yesterday’s.

“People are very lethargic, and it’s because it’s been a very difficult market,” said Richard Driehaus, chief investment officer of Driehaus Capital Management in Chicago. “Nobody really believes in growth. The market is much more sensitive to negative news.”

Part of the Dow’s gains came from Caterpillar, which rose $1.10 to $73.15 after Goldman Sachs upgraded the stock to “outperform” from “in-line/neutral,” citing strong profit performance and an attractive share price.

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