- The Washington Times - Wednesday, March 2, 2005

NEW YORK (AP) “Stocks ended close to unchanged levels yesterday after a roller-coaster session that saw shares climb on bullish testimony from Federal Reserve Chairman Alan Greenspan about the state of the economy, only to be knocked down by anxiety over pricey oil.

Mr. Greenspan was upbeat about the economy in remarks to the House Budget Committee, and did not suggest there would be any major changes in the Fed’s monetary policy, which was a welcome relief to investors. But the short-term cheer over his remarks was not enough to allay the market’s deeper concerns, particularly as crude futures rallied past $53 per barrel, to a four-month high.

The Dow Jones Industrial Average shed 18.03, or 0.17 percent, to 10,811.97, closing 58 points off its intraday high of 10,869.83 — a level the Dow hasn’t settled at since June 2001.

The broader gauges also ended the day lower. The Standard & Poor’s 500 Index shed 0.33, or 0.03 percent, to 1,210.08. The Nasdaq Composite Index was down 3.75, or 0.18 percent, at 2,067.50.

In remarks to the House Budget Committee, Mr. Greenspan emphasized the importance of congressional action on Social Security, and said increasing taxes would be negative for the economy right now. His assertion that economic activity “appears to be expanding at a reasonably good pace” was reassuring to investors, but the late-day surge in oil prices was too high for the market to ignore.

“Oil prices were relatively calm to start the day. They were around $52 and seemed like they were going the right way; then they rallied, and that certainly has spooked the market,” said Brian Pears, head equity trader at Victory Capital Management in Cleveland. “There’s also something to be said about the fact that we’re constantly bumping up against these yearly highs … yet we can’t seem to get through. I think people get scared.”

The U.S. Energy Department’s weekly supply report showed a rise in gasoline and crude inventories, and a decline in stores of distillate fuel, which includes heating oil and diesel. But a separate report from the Paris-based International Energy Agency suggested global energy demands were likely to rise this year.

Traders bet prices would do the same: Light, sweet crude for April delivery soared $1.37 to settle at $53.05 a barrel on the New York Mercantile Exchange. The dollar edged higher against other world currencies, gold prices were mixed and long-dated Treasurys ended lower.

Oil concerns, combined with persistent worry about inflation and interest rates, have made for a difficult market, and analysts think more volatility lies ahead. This has contributed to a “one step forward, two steps back” climate for stocks, said Peter Cardillo, chief strategist with S.W. Bach & Co. “The tone of the market seems strong [but] we’re in a cautious atmosphere,” he said.

“There’s a willingness to buy, but the uncertainties of how high interest rates have to go, and the potential impact of rates moving up in a more aggressive way, has got investors a little bit nervous.”

MCI Inc. was up 9 cents at $23.45 after the long-distance provider’s merger partner, Verizon Communications Inc., said MCI could have two weeks to examine a competing bid from Qwest Communications International Inc. The announcement came a day after Qwest executives made a direct appeal to MCI to reconsider its $8 billion bid over Verizon’s lower-priced deal. Qwest was down 12 cents at $3.93, while Verizon rose 22 cents to $36.47.

In earnings news, American Eagle Outfitters Inc. rose 6.5 percent, or $3.57, to $58.87, after its fourth-quarter profits nearly tripled as same-store sales rose sharply. Earnings of $1.32 per share beat forecasts by analysts surveyed by Thomson First Call by 7 cents. Costco Wholesale Corp. fell 3.6 percent, or $1.69, to $45.02, after its earnings missed Wall Street estimates by a penny, excluding charges.

Lear Corp. slid 11 percent, or $5.76, to $47, a day after the automotive interior systems supplier slashed its first-quarter earnings forecast, citing industry production cuts. Several brokerage houses cut their ratings on the stock, including Wachovia, Lehman, Prudential and Morgan Stanley. AutoZone Inc. gained $1 to $98.33 after its second-quarter profits rose more than 30 percent thanks to a tax benefit, lower costs and a boost in sales due to lower fuel prices.

Decliners outnumbered advancing issues 15 to 13 on the New York Stock Exchange. Volume came to 1.57 billion shares, compared with 1.71 billion traded Tuesday.

The Russell 2000 index, which tracks smaller company stocks, was down 1.20, or 0.19 percent, at 637.33.

Overseas, Japan’s Nikkei stock average added 0.28 percent. In Europe, France’s CAC-40 rose 0.19 percent, Britain’s FTSE 100 declined 0.15 percent and Germany’s DAX index gained 0.22 percent.

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