Stocks closed mostly higher yesterday after Federal Reserve Chairman Alan Greenspan said the economy has weathered the increase in oil prices...
NEW YORK — Stocks closed mostly higher yesterday after Federal Reserve Chairman Alan Greenspan said the economy has weathered the increase in oil prices “reasonably well.”
The Dow Jones industrial average rose 12.58 to 10,456.21.
Microsoft, one of the 30 Dow stocks, added 7 cents to close at $25.34 a share. Boeing, also a Dow stock, gained $1.88 to $66.55.
Broader stock indicators were slightly lower. The Standard & Poor’s 500 index rose 0.03 to 1,215.66, and the Nasdaq composite index fell 5.04 to 2,116.42.
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Crude-oil futures sagged. A barrel of light crude was quoted at $65.07, down 75 cents, in trading on the New York Mercantile Exchange.
Earlier in the session, stocks fell after consumer confidence hit its lowest point in two years, raising fears that U.S. shoppers might cut their spending and slow the economy.
But Greenspan calmed investors by emphasizing “the incredible resilience of the U.S. economy in terms of flexibility,” said Lynn Reaser, chief economist for the investment-strategy group at Bank of America.
Speaking to the National Association for Business Economics in Chicago, Greenspan emphasized that before policy-makers respond to disasters, markets react through prices, interest rates and exchange rates, which work together to cushion the economy.
That was just what investors wanted to hear after the Conference Board said its consumer-confidence index dropped even more than analysts expected, falling 18.9 points in September for a reading of 86.6, down from 105.5. Economists were expecting a reading of 98. With consumer spending driving the economy, the dive in sentiment after hurricanes Katrina and Rita could dampen sales of everything from cars to cashmere.
The prevailing feeling on Wall Street now is that some of the issues Katrina raised will linger.
“There’s a lot of issues and questions in front of the market, but I don’t think there’s going to be an easy resolution to any of them, or a quick resolution,” said Stephen Massocca, president of Pacific Growth Equities. “I think a lot of people are frozen until they get a better idea of what it all means.”
The consumer-confidence drop was the largest fall from month to month in 15 years.
In other economic news, new-home sales also fell in August, dropping 9.9 percent, according to the Commerce Department. While sales of existing homes increased in August, new-home sales are thought to be a better indicator of whether increasing interest rates are changing home buyers’ behavior.
Companies began to give damage assessments from Hurricane Rita. While the damage was generally lighter than expected, stocks in oil-and-gas companies and others with a large Gulf Coast presence dipped.