Tuesday, October 26, 2004

NEW YORK (AP) — Wall Street strode higher yesterday, rallying along with insurance stocks on Marsh & McLennan Cos. Inc.’s decision to fire its chief executive officer in the face of an ongoing probe. Blue chips added 138 points as relief that the investigation would not result in criminal charges against the company offset higher oil prices and weak economic data.

Analysts attributed at least some of the day’s trading to bargain hunting, as October winds to a close, marking the end of the fiscal year for many mutual funds — a time when managers reposition themselves and make new bets.

This was reflected in better performance in the financials, health care and pharmaceuticals sectors.

“I would say half of it is relief over the insurance stocks and the other half is end-of-October bargain hunting. People want to sell their losers and ride the winners,” said Matt Kelmon, portfolio manager of the Kelmoore Strategy Funds. “Then on the other side, there are people not wanting to make any decisions ahead of the election.”

The Dow Jones Industrial Average gained 138.49, or 1.42 percent, to 9,888.48.

Broader stock indicators also were higher. The Standard & Poor’s 500 Index was up 16.29, or 1.49 percent, at 1,111.09. The Nasdaq Composite Index added 14.75, or 0.77 percent, to 1,928.79.

Worries about job prospects drove consumer confidence lower for a third consecutive month, according to the latest reading by the Conference Board. The 3.9-point slide in the group’s Consumer Confidence Index was steeper than expected, bringing the reading to 92.8. Analysts had expected a 94. The drop raised questions about how robust spending is likely to be during the critical holiday shopping season.

Uncomfortably high energy prices are another potential pressure on consumer spending, and there was little relief in sight yesterday. Light, sweet crude for December delivery settled 63 cents higher at $55.17 on the New York Mercantile Exchange.

“Pick your uncertainty. You have oil. You have elections. We need to pop some of these bubbles of uncertainty before we can go anywhere,” said Bill Groenveld, head trader for VFinance Investments. “But look at how we’ve held in despite all this stuff. We got a strong market once you move these things out of the way.”

The insurance sector got a boost after Marsh & McLennan replaced its chief executive officer and announced a series of reforms in the hope of appeasing New York Attorney General Eliot Spitzer, who is in the midst of a bid-rigging investigation of the company.

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