- The Washington Times - Tuesday, June 21, 2005

NEW YORK (AP) — Stocks finished an uninspiring session mixed yesterday as investors kept a wary eye on near-record oil prices and debated the prospect of a Social Security reform package without private investment accounts.

One day after reaching record highs, crude-oil futures fell below $59 per barrel, but the historically high prices were still weighing on investors’ enthusiasm for stocks. A barrel of light crude settled at $58.90, down 47 cents, on the New York Mercantile Exchange.

Some analysts were cheered that stocks have yet to sell off despite higher oil prices, though there are growing worries about whether the market will be able to sustain its gains from May and June should oil prices remain at these levels.

“What we’ve seen yesterday and today is some hesitancy, some skepticism on the part of investors as to whether the current rally can continue” owing to high oil prices, said Ken Tower, chief market strategist for Schwab’s CyberTrader. “It’s tough to generate a lot of enthusiasm.”

Investors were also concerned about the state of Social Security reform after President Bush encouraged Republicans in Congress to introduce a proposal that did not include private accounts favored on Wall Street.

The Dow Jones Industrial Average fell 9.44, or 0.09 percent, to 10,599.67

Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 Index was down 2.49, or 0.2 percent, at 1,213.61, and the Nasdaq Composite Index gained 2.94, or 0.14 percent, to 2,091.07.

Bonds posted a strong rally after Monday’s sell-off, with the yield on the 10-year Treasury note falling to 4.05 percent from 4.11 percent late Monday. The dollar was mixed against major foreign currencies, while gold prices fell from Monday’s three-month highs.

“You’re seeing some bond movement, which kind of brings a little bit of movement to stocks, but really, there’s not much going on,” said Bryan Piskorowski, market analyst with Wachovia Securities.

The preoccupation with oil led investors to overlook the latest spate of merger news. Wall Street has traditionally found encouragement in mergers and acquisitions, seeing in them a reflection of corporate America’s willingness to make investments in growth.

Appliance maker Maytag Corp. is being courted by two such private investment groups. The company agreed to a $14-per-share takeover last month, but its board said late Monday it would review a $16-per-share offer by another private group backed by Chinese appliance manufacturer Haier Group. Maytag rose 83 cents to $16.06 on the news.

Unocal Corp. climbed $1.38 to $64.85 on word that Chinese petroleum company CNOOC Ltd. may issue a $20 billion takeover bid, which would surpass Chevron Corp.’s $16.7 billion offer for the company, made in April. Chevron slumped 56 cents to $58.78.

Ford Motor Co. added 6 cents to $11.17 after the New York Post reported interest from a number of private equity groups in a potential acquisition of Ford’s Hertz car-rental subsidiary. Ford announced last week that it planned to spin off Hertz.

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