New York – A drop in crude-oil futures pushed stocks modestly higher Wednesday, helped by government predictions of lower gasoline prices.
Wall Street was encouraged when oil prices fell below $65 per barrel as more Gulf Coast production facilities resumed operations and traders saw that Katrina’s damage to petroleum infrastructure was less than originally feared. A barrel of light crude settled at $64.25, down $1.59, on the New York Mercantile Exchange.
Large-cap stocks got a bounce after the Energy Information Administration, a division of the Department of Energy, said Wednesday morning that it sees U.S. retail gasoline prices falling to $2.58 a gallon in the fourth quarter.
The administration also slashed its forecasts for growth in U.S. oil demand this year and next, saying higher costs would deter consumption.
Stocks moved in a narrow band, but trading was choppy as investors took each new piece of news and tried to parse the effects of Hurricane Katrina.
“To an extent, we’re all just groping in the dark to make sense of all the news, all the stories, all the data,” said Jack Caffrey, equities strategist at J.P. Morgan Private Bank, adding that much of the data from prior months have been made obsolete by last week. “What are the ripple effects? What will the costs be on a cost front, a delivery front and a psychology front?”
The Dow Jones industrial average rose 44.26, or 0.42 percent, to 10,633.50. On Tuesday, the Dow rose 141.87, its best one-day gain since July 8.
Broader stock indicators were slightly higher. The Standard & Poor’s 500 index rose 2.97, or 0.24 percent, to 1,236.36, and the Nasdaq composite index rose 5.17, or 0.24 percent, to 2,172.03.
The Bloomberg Colorado Index, a price-weighted list of companies based in the state, rose 1.44 to 310.45.
Bonds continued the previous session’s sell-off, with the yield on the 10-year Treasury note rising to 4.14 percent from 4.09 percent late Tuesday.
The dollar was mixed against other major currencies. Gold prices fell.
