- The Washington Times - Monday, September 12, 2005

NEW YORK (AP) — Wall Street zigzagged through a listless session yesterday, closing mostly higher as a spate of acquisitions lifted the technology sector and energy prices extended their declines.

The gains were limited by airline woes and worries about interest rates.

Yesterday’s $12 billion in merger activity signaled optimism on Wall Street two weeks after Hurricane Katrina’s devastation of the Gulf Coast threatened the U.S. economy, but the market treaded water while waiting to see whether the Federal Reserve raises rates yet again at next week’s meeting. Analysts are split over the Fed’s action, with some saying policy-makers will stay on course while others think rates should stay unchanged to fend off an economic retreat.

Investors felt some relief as oil and gasoline futures sank, pulled lower by reports that efforts to resume production are progressing after Katrina brought much of the Gulf Coast to a standstill. A barrel of light crude fell 74 cents to $63.34 on the New York Mercantile Exchange, where gasoline futures also slipped 9 cents to $1.87 a gallon.

The tech sector rallied on news that software maker Oracle Corp. plans to acquire rival Siebel Systems Inc. and that online auctioneer EBay Inc. is buying Internet-telephone firm Skype Technologies SA — for a combined $8.45 billion. Wachovia Corp. also agreed to acquire car-financing firm Westcorp.

At the close of trading, the Dow Jones Industrial Average gained 4.38, or 0.04 percent, to 10,682.94.

Broader stock indicators were mixed. The Standard & Poor’s 500 Index dropped 0.92, or 0.07 percent, to 1,240.56, while the Nasdaq Composite Index climbed 7.32, or 0.34 percent, to 2,182.83.

Declining issues outpaced advancers by about 6 to 5 on the New York Stock Exchange, where volume of 1.43 billion shares fell short of the 1.47 billion shares traded Friday.

Bonds ended lower, with the yield on the 10-year Treasury note jumping to 4.18 percent from 4.12 percent on Friday. The dollar was mixed against most major currencies in European trading, while gold prices inched up.

Wall Street has been speculating about the Fed’s rate policy, with many hoping the central bank will halt its string of 10 consecutive quarter-point raises to the nation’s benchmark interest rate in order to keep lending costs lower while the Gulf Coast rebuilds.

Some analysts say that the Fed has spelled out clearly its intention of boosting rates to balance growth and inflation and that Fed governors will stay on course despite widespread fears that higher rates will restrict consumer spending.

“If the Fed doesn’t raise rates, it’s strictly for morale,” said Ed Peters, chief investment officer at PanAgora Asset Management. “Given the recent market swings, they’re going to go ahead with the increase. There will probably be two more hikes.”

Investors will get a glimpse of the nation’s economic health after the government reports several key indicators later this week, including price inflation, retail sales and trade balance.

Mr. Peters, however, said much of that data will be brushed aside, because it measures activity for the month of August before Katrina hit the Gulf Coast.

The day’s takeover deals were led by Oracle’s purchase of Siebel, a maker of customer-management software, for $5.85 billion in cash and stock.

Oracle’s $10.66-per-share bid was a 16.8 percent premium to Siebel’s closing price of $9.13 on Friday.

Oracle rose 21 cents to $13.49, and Siebel jumped $1.16, or 12.7 percent, to $10.29.

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