- The Washington Times - Friday, May 21, 2004

NEW YORK (AP) — Wall Street got a badly needed break from oil price worries yesterday with stocks rising modestly as Saudi Arabia indicated that OPEC should increase its daily output. However, the Dow Jones Industrial Average finished the week under the 10,000 mark for the first time this year.

Wall Street’s preoccupation with skyrocketing oil prices and their effect on inflation was relieved somewhat when Saudi Arabia proposed raising OPEC’s production ceiling by more than 2 million barrels a day. Crude oil futures dropped 87 cents to $39.93 a barrel in late trading.

But analysts cautioned that this is just a proposal, and might not be approved when members of the Organization of Petroleum Exporting Countries meet in June. That tentativeness was reflected by yet another day of very light volume on the major markets.

“I view it as temporary,” Ryan Smith, managing director of equity trading at Banc One Investment Advisors in Columbus, Ohio, said of the oil-inspired rally. “We’ll have to wait and see if they follow through.”

The Dow gained 29.10, or 0.3 percent, to 9,966.74. Earlier in the session, the Dow had been up 99 points from Thursday’s close.

Broader stock indicators were also moderately higher. The Standard & Poor’s 500 Index rose 4.37, or 0.4 percent, to 1,093.56, and the Nasdaq Composite Index was up 15.50, or 0.8 percent, at 1,912.09, breaking past the 1,900 mark for the first time since May 14.

For the week, the Dow finished 0.5 percent lower and the S&P; was down 0.2 percent, while the Nasdaq gained 0.4 percent. It was the third straight week of losses for the Dow and S&P; 500. The Nasdaq reversed a two-week slide.

It was also the first week the Dow finished below 10,000 since the week ended Dec. 5.

Investors were somewhat more inclined to buy after Thursday’s report of a lower-than-expected increase in the Conference Board’s Index of Leading Economic Indicators. The report indicated that the economy might not be overheating as much as feared, and Wall Street interpreted that as relieving some of the pressure on the Federal Reserve to raise interest rates.

The change in sentiment allowed investors to react enthusiastically to upbeat earnings reports for the first time in weeks. Wall Street largely had shrugged off companies’ solid first-quarter reports last month as investors were fixated on interest rates and the possibility that higher borrowing costs would erode results for the coming quarters.

Still, many analysts are questioning whether yesterday’s improvement in investor sentiment can be sustained with so many unresolved issues and problems in the United States and overseas.

“Our view is it’s going to be a chaotic market environment until the (presidential) election in November,” said Jason R. Graybill, senior portfolio manager at Abner, Herrman & Brock Asset Management in New York. “Leading into November we’re going to get clarity on a lot of the uncertainties out there.”

“The underlying economy is extremely robust. Consumers are spending, businesses are spending, and the government is obviously spending,” Mr. Graybill said. “But the international political community is kind of waiting to see who our next president is going to be.”

Nordstrom Inc. surged $2.67 to $39.90 after beating Wall Street’s expectations with first-quarter profits that more than doubled on a 13 percent gain in sales at stores open more than a year.

Gap Inc. was up 7 cents at $22.58 following news that the clothing retailer boosted its first-quarter profits by 54 percent, matching analysts’ expectations.

Martha Stewart Living Omnimedia Inc. jumped 75 cents to $9.30 after a government witness at Martha Stewart’s trial was charged with perjury for allegedly making false statements on the stand, sparking speculation on Wall Street that Stewart’s conviction could be reversed.

Automaker General Motors Corp. slipped 38 cents to $43.08 after announcing it will cut 872 jobs at its Saturn plant in Delaware.

SBC Communications Inc. was up 2 cents at $24.33 following a strike by 100,000 workers who walked off the job early yesterday to protest the phone company’s latest contract offer.

Advancing issues outnumbered decliners by about 8 to 5 on the New York Stock Exchange, where volume came to 1.26 billion, compared to 1.21 billion on Thursday.

The Russell 2000 index of smaller companies was up 5.06, or 0.9 percent, at 545.81.

Overseas, Japan’s Nikkei stock average surged 1.9 percent higher. In Europe, Britain’s FTSE 100 closed down almost 0.1 percent, Germany’s DAX index fell 0.19 percent, and France’s CAC-40 lost 0.1 percent.

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