New York – Stocks fluctuated before closing modestly higher today as oil prices neared $66 a barrel 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 last month, while investors also welcomed new data showing August sales of pre-owned homes reached their second-highest level ever.
Volatile afternoon energy trading briefly led stocks into negative territory, even after President Bush said the government would tap the nation’s reserves to make up for lost oil production from the recent hurricanes. But despite higher oil prices, Wall Street rallied in the last hour of trading.
According to preliminary calculations, the Dow Jones industrial average climbed 24.04, or 0.23 percent, to 10,443.63, after jumping nearly 90 points in morning activity.
The broader stock indicators also moved higher. The Standard & Poor’s 500 index rose 0.34, or 0.03 percent, to 1,215.63, and the Nasdaq composite index added 4.62, or 0.22 percent, to 2,121.46.
Bonds continued their slide, with the yield on the 10-year Treasury note rising to 4.29 percent from 4.25 percent Friday. The dollar was mixed against other major currencies in European trading, while gold prices inched up.
Wall Street’s advance extends a brief recovery from the end of last week, when Rita weakened and calmed fears of more destruction similar to the havoc caused by Katrina in late August. The Dow posted three straight days of hefty losses early in the week and finished 2.09 percent lower, its biggest weekly decline since late June.
Analysts said that with no major headlines driving the market, oil prices and interest rates are once again investors’ primary concerns and could factor into whether Wall Street sees another runup before the end of the year.
Oil prices are 40 percent higher than year-ago levels, but linger below a record of $70.85 a barrel reached after Katrina knocked out 90 percent of the region’s capacity. A barrel of light crude added $1.63 to settle at $65.82 on the New York Mercantile Exchange, where gasoline futures also rose 4.4 cents to $2.129 a gallon.
Bill Strazzullo, chief market strategist at State Street Global Markets, said he thinks crude oil remaining above $60 a barrel may increase the likelihood of a year-end rally.
“But just staying between $60 and $70 a barrel is very bullish for oil,” Strazzullo said. “It’s going to make it difficult for the market to have much more than one more push upward.” Investors spent part of the session assessing Federal Reserve Chairman Alan Greenspan’s softer comments about the housing market.
Greenspan, who recently expressed concerns about an overheating market, told attendees at a California banking conference that most homeowners have enough equity to cushion the impact of a drop in prices should demand suddenly wane. Wall Street interpreted his remarks as a sign the Fed is comfortable boosting rates again when it meets in November.
“If he’s already dropping these hints, it won’t be a big surprise,” said Matt Kelmon, portfolio manager at Kelmoore Strategy Funds.
The outgoing Fed chair’s comments came after the National Association of Realtors reported existing-home sales grew 2 percent last month, dodging economists’ predictions for a decline as an indication that the housing boom was finally starting to slow.
In corporate news, Boeing Co. climbed after landing a tentative labor agreement with its mechanics, who walked off the job three weeks ago. Union leaders have urged its 18,400 members to approve the deal, which increases pension payouts, continues retiree medical benefits and carries an 8 percent signing bonus but no wage raise. Boeing added $1.47 to $64.67.
Shares of Delphi Corp. plunged on renewed bankruptcy concerns from Deutsche Bank analyst Rod Lache, who raised doubts that the auto parts supplier will be able to negotiate terms with former parent General Motors Corp. and the United Auto Workers. The company on Friday warned of plant closings and layoffs if it cannot secure more cash. Delphi slumped 47 cents to $2.99.
Drugstore chain Walgreen Co. reported its quarterly profit rose about 1 percent after costs from Katrina. Excluding charges, Walgreen’s earnings of 35 cents per share still missed Wall Street estimates by 2 cents. The company added 32 of its stores in the New Orleans region remain closed. Walgreen dropped $1.01 to $41.50.
Shipping firm FedEx Corp. said income for the current period may also be hurt by Katrina while service to New Orleans continues to be disrupted. FedEx, however, did not estimate the hurricane’s impact in its quarterly report filed late Friday. FedEx rose 58 cents to $83.68.
Advancing issues outpaced decliners by more than 9 to 7 the New York Stock Exchange, where volume of 1.56 billion shares topped the 1.52 billion shares traded on Friday.
The Russell 2000 index of smaller companies climbed 4.74, or 0.72 percent, to 660.20.
Overseas, Japan’s Nikkei stock average gained 1.77 percent.
Britain’s FTSE 100 added 0.73 percent, Germany’s DAX index surged 2.37 percent, and France’s CAC-40 was higher by 2 percent.
