Stocks End Modestly Higher
Stocks finished modestly higher Monday, although off their best levels of the session, as oil prices jumped despite lower-than-expected damage estimates from Hurricane Rita.
Wall Street made a strong early advance on reports that key petroleum facilities along the Texas coastline escaped the storm with relatively less damage than during Hurricane Katrina. Investors also welcomed new data showing that August sales of previously owned homes reached their second-highest level ever.
But a rebound in oil prices later in the day briefly pushed stocks into negative territory. Near-term oil futures in New York rose $1.63 to $65.82 a barrel.
Still, the equity market managed to pull back into positive territory in the final hour of trading.
The Dow Jones industrial average ended with a gain of 24.04 points, or 0.2%, to 10,443.63, after jumping nearly 90 points in morning activity.
The Standard & Poor’s 500 index was up 0.34 of a point, or less than 0.1%, to 1,215.63. The Nasdaq composite added 4.62 points, or 0.2%, to 2,121.46.
Winners topped losers by 5 to 4 on the New York Stock Exchange.
The market also was challenged by rising yields in the Treasury bond market, after Federal Reserve Chairman Alan Greenspan and other Fed officials hinted in separate comments that the central bank would continue raising short-term interest rates in quarter-point increments.
The 10-year Treasury note yield ended at 4.29%, up from 4.25% on Friday and the highest since Aug. 11.
The two-year T-note finished at 4.05%, up from 4.01% on Friday and the highest since Aug. 29.
“The market expectation for the Fed to continue on that measured course is firmly in pace,” said David Glocke, a principal at mutual fund firm Vanguard Group in Valley Forge, Pa.
Wall Street’s advance Monday extended a mild recovery from Thursday and Friday, after stocks sank in the first three trading sessions of last week. The Dow slid 2.1% for the five days, its biggest weekly decline since late June.
With four trading sessions left in the third quarter, the Dow is down 3.2% year to date, the S&P; 500 is up 0.3% and the Nasdaq index is down 2.5%. Those returns don’t include dividend income.
Many market optimists are expecting stocks to rally in October as companies report third-quarter earnings. Operating earnings for the S&P; 500 companies overall are expected to be up 17.9% from a year earlier, according to earnings-tracker Thomson Financial. Excluding energy companies’ results, the average gain is expected to be about 12%, Thomson said.
Among Monday’s market highlights:
* Energy stocks rose with oil and natural gas prices. A gauge of energy issues gained 1.6% for the best performance among 24 industry groups in the S&P; 500.
Valero climbed $2.27 to $113.04, Amerada Hess jumped $3.24 to $137.35 and Exxon Mobil, the world’s largest publicly traded oil company, gained 77 cents to $64.60.
* Insurers were mixed after damage from Hurricane Rita was expected to be less than initially feared. American International Group, the No. 1 insurer, rose 63 cents to $60.69. St. Paul Travelers, which insures the most commercial properties in Texas, added $1.20 to $43.95.
But Allstate lost 46 cents to $54.07 and Hartford Financial was down 71 cents to $74.44.
* Caterpillar fell 58 cents to $58.34. An analyst at Citigroup cut his rating on the machinery giant’s stock to “hold,” citing concerns about rising raw materials costs.
Also downgraded in the machinery sector were Cummins, off $2.27 to $87.48, and Ingersoll-Rand, which lost $1.14 to $38.26.
* Boeing jumped $1.47 to $64.67 after reaching a tentative three-year agreement with its striking machinists union.
* Advanced Micro Devices gained 65 cents to $23.63. Shares of the world’s second-largest maker of chips that run personal computers may rise to as much as $50 within two years as investors focus on the company’s main processor business after a spinoff of its flash-memory unit is completed, Barron’s magazine reported.
* Walgreen lost $1.01 to $41.50. The company said fiscal fourth-quarter profit increased 1.4%, less than analysts’ estimates, as Hurricane Katrina damaged property and boosted costs. Same-store sales had the slowest rise in more than a year.
* Among Southland issues, Ameron soared $2.91 to $43.07 after the Pasadena-based maker of concrete pipes and other infrastructure products said fiscal third-quarter profit was $1.58 a share, up from operating earnings of 72 cents a year earlier. Sales rose 25% to $193 million.
* Many overseas markets rallied sharply, continuing what has mostly been a strong quarter for foreign shares. The German market gained 2.4%, Japan’s market was up 1.8% and the Mexican market rose 0.7% to a record high.
