- The Washington Times - Tuesday, June 1, 2004

NEW YORK (AP) — A change of heart gave Wall Street a late-day rally yesterday, as strong economic data overcame investors’ anxiety over a surge in oil prices.

An attack on foreign oil workers in Saudi Arabia, which killed 22 persons, sent benchmark oil prices climbing $2.42 to a record $42.30 per barrel on the New York Mercantile Exchange. The jump raised investors’ worries about the effect of rising energy prices on inflation and the Federal Reserve’s interest-rate policy.

However, a higher-than-expected rise in construction spending and strong growth in the manufacturing sector showed that the potential for higher rates would not harm two of the major engines of the economy — a huge concern of investors. Those bullish figures kept stocks from plunging and let buyers re-enter the market late in the session. Light volume after the holiday weekend helped keep volatility low as well.

The Dow Jones industrial average closed up 14.20, or 0.1 percent, at 10,202.65.

Broader stock indicators were narrowly higher. The Standard & Poor’s 500 index was up 0.52 at 1,121.20, and the Nasdaq Composite Index gained 4.03, or 0.2 percent, to 1,990.77.

Stocks were coming off solid gains last week, the first major up week on Wall Street in more than a month. However, many investors held off making large bets until the monthly payroll report — a major gauge of the economy’s strength — was released Friday.

Economic indicators yesterday revealed a growing economy. Construction spending rose 1.3 percent in April, the best month ever, while the Institute of Supply Management’s index of manufacturing activity rose to 62.8 last month, up from 62.4 in April.

Both figures were better than economists had expected, but did little to move stocks until investors had second thoughts late in the session.

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