- The Washington Times - Monday, May 9, 2005

NEW YORK (AP) — Wall Street shook off concerns about inflation and pushed stocks higher yesterday as a spate of merger news encouraged investors to return to the market. Rising oil prices, however, kept the gains in check.

With a deal announced in the energy sector and talks among airlines and online brokerages, companies’ appetites for mergers and acquisitions remained healthy, showing corporate America’s confidence in the economy.

Investors also seemed to have more confidence in the Federal Reserve’s ability to balance economic growth with rising prices, keeping both inflation and the specter of an economic slowdown in check. And finally, with the major indexes well off their 2005 highs, investors saw a chance to find bargains.

The Dow Jones Industrial Average rose 38.94, or 0.38 percent, to 10,384.34.

Broader indicators also made gains. The Standard & Poor’s 500 index added 7.49, or 0.64 percent, to 1,178.84, and the Nasdaq Composite Index gained 12.32, or 0.63 percent, to 1,979.67.

Oil prices surged past $52 per barrel as concerns about summer gasoline demand continued to permeate the market. A barrel of light crude was quoted at $52.03, up $1.07, on the New York Mercantile Exchange.

The bond market moved lower as investors anticipated a larger surge in supply from a Treasury auction later in the week. The yield on the 10-year Treasury note rose to 4.28 percent from 4.26 percent late Friday. The dollar was mixed against most major currencies, while gold prices rose.

The move in the bond market also signaled movement of capital from bonds back into stocks. The major indexes have held on to recent gains, with very little of the frenzied selling that marked trading last month. However, volume remained light, and some analysts and traders said investors remained very tentative. And even bullish analysts agreed that the market will remain sensitive to bad news and will send stocks lower at the first sign of negativity.

In merger news, Cinergy Corp. climbed $1.94 to $42.32 after it agreed to be acquired by Duke Energy Corp. for $9 billion, combining two of the biggest players in electricity and natural gas transmission. Duke Energy lost 54 cents to $28.82.

The New York Times and the Wall Street Journal reported that E-Trade Financial Corp. has made an unsolicited $5.5 billion takeover bid for rival online discount broker Ameritrade Holding Corp. E-Trade rose 77 cents to $12.70, and Ameritrade surged $2.11 to $13.42.

America West Holdings Corp. is closer to a deal to buy bankrupt airline US Airways Group Inc., the Journal reported. The carriers are hoping to have an agreement in place before America West’s annual shareholder meeting next Tuesday, the Journal said.

America West lost 8 cents to $4.34.

Dow industrial McDonald’s Corp. added 74 cents to $30.12 after reporting strong domestic sales during the past month, offsetting lagging demand in Europe.

Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange, where volume came to 1.36 billion shares, compared with 1.37 billion on Friday.

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