- The Washington Times - Wednesday, August 25, 2004

NEW YORK (AP) — Stocks rallied in quiet trading yesterday as oil prices fell for a fourth straight session, countering a pair of government reports that gave a mixed picture of the economy.

The moderate surge in buying was welcome on Wall Street, where investors have been in no hurry lately to commit new money to stocks. Many have stuck to the sidelines in the face of a long list of worries, including volatile oil prices and persistent terror fears. Contributing to the session’s light volume, several traders are preparing to take off ahead of the Republican National Convention in New York next week.

“All things being equal, if the price of oil continues to work its way lower, that will be very good for the market,” said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee. “It doesn’t mean the market will go straight up, but hopefully we’ve put in a bottom and we can now work higher.”

The Dow Jones Industrial Average ended up 83.11, or 0.8 percent, at 10,181.74.

The broader gauges also posted gains. The Nasdaq Composite Index rose 23.83, or 1.3 percent, to 1,860.72. The Standard & Poor’s 500 index finished up 8.77, or 0.8 percent, at 1,104.96.

Soaring fuel prices have pressured the market for weeks, with oil topping $49 per barrel last week, a record level. Prices have softened somewhat as anxiety about global supply eased, and a weekly government report showing higher-than-expected gasoline inventories sent prices lower still yesterday. Crude oil for October delivery dropped $1.74, or 3.9 percent, to $43.47 per barrel on the New York Mercantile Exchange. Gasoline futures prices tumbled 5 percent, helping ease the pressure on Wall Street.

Investors also were pleased by a Commerce Department report that orders for costly manufactured goods rose 1.7 percent last month, a sign that the economy is shaking off the summer doldrums. The best reading in four months for durable goods — big-ticket items expected to last at least three years — was boosted by demand for airplanes, machinery and communications equipment.

But the department found that sales of new homes declined 6.4 percent last month, a far steeper drop than analysts had anticipated. The decline left home sales at their lowest level since December. Figures for June also were revised lower. Analysts said a challenging labor market and high fuel prices may be making people wary about purchasing a new home.

Aside from falling oil prices, there was little incentive for buying, making some analysts wonder whether the stock rally would hold. Many unknowns, including the outcome of the presidential race, continue to weigh heavily on investors.

“The fact that oil prices are falling off a bit is certainly helpful,” said David Legeay, director of portfolio management at McDonald Financial Group. “[But] fear that terrorism will disrupt supply is hanging over the market as a whole. Terrorism is also in play as we move forward to the election season.”

Among the beneficiaries of rising orders for big-ticket goods, Dow component Boeing Co. rose 3.1 percent, or $1.59, to $52.50, on news that Singapore Airlines had ordered 31 long-range Boeing 777-300 jetliners.

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