Stocks got a lift from Federal Reserve Chairman Alan Greenspan yesterday, rising modestly after he said the recent climb in oil prices was...
NEW YORK — Stocks got a lift from Federal Reserve Chairman Alan Greenspan yesterday, rising modestly after he said the recent climb in oil prices was already curbing demand for crude. Oil futures dropped sharply on the news.
The Dow Jones industrial average rose 37.32 to 10,458.46.
Microsoft, one of the 30 Dow stocks, gained 24 cents to close at $24.47 a share. Boeing, also a Dow stock, was unchanged at $58.33.
Broader stock indicators also moved higher. The Standard & Poor’s 500 index was up 5.27 at 1,181.39, and the Nasdaq composite index gained 8.25 to 1,999.32.
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Speaking before a group of U.S. petrochemical producers, Greenspan said more refining capacity was needed around the world, but that energy demand was already starting to soften, a trend that could help bring prices down. That assessment of the oil situation, investors believed, could keep the Fed from raising rates aggressively, since it appeared unlikely that inflation would accelerate due to higher prices.
Analysts, however, said that for the short term, Greenspan’s comments didn’t change the fact that oil, which traded above $58 a barrel on Monday, remains near record highs, and interest rates are on the rise, gradually or not. The result was a trendless session on Wall Street that showed only a modest response to Greenspan’s comments.
“Nothing has really changed for the market. You have rising rates, decelerating earnings growth and you’ve got energy prices,” said Russ Koesterich, senior portfolio manager at Barclay’s Global Investors in San Francisco. “Energy continues to be a drag on the market because, sure, you’re down $1 a barrel today, but these prices are still high and they’ll start to bite into consumer spending at some point.”
Crude-oil futures dropped sharply after Greenspan’s remarks, with a barrel of light crude settling 97 cents lower at $56.04 on the New York Mercantile Exchange.
Some investors sought bargains after March’s losses. Many preferred to wait for next week, however, when first-quarter earnings reports start in earnest. Also, oil prices have not fallen enough to give investors a sense of lasting relief.
“I think you’re getting at least a few investors, with an asset allocation point of view, seeing these lower prices and getting back into the market,” said Joseph Battipaglia, chief investment officer at Ryan Beck. “The underlying economic fundamentals are pretty good, but you still have everyone’s favorite ghost — oil — making things very tentative.”