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The Honolulu Advertiser

Posted at 12:23 p.m., Friday, May 21, 2004

Stocks rise, but Dow has its worst week of ’04

Hawai'i Stocks
Updated Market Chart

By Michael P. Regin
Associated Press

NEW YORK — Wall Street got a badly needed break from oil price worries today, with stocks rising modestly as Saudi Arabia indicated that OPEC should increase its daily output. However, the Dow Jones industrial average finished the week under the 10,000 mark for the first time this year.

Wall Street’s preoccupation with skyrocketing oil prices and their effect on inflation was relieved somewhat when Saudi Arabia proposed raising OPEC’s production ceiling by more than 2 million barrels a day. Crude oil futures dropped 87 cents to $39.93 a barrel in late trading.

But analysts cautioned that this is just a proposal, and might not be approved when OPEC ministers next meet in June. That tentativeness was reflected by yet another day of very light volume on the major markets.

"I view it as temporary," Ryan Smith, managing director of equity trading at Banc One Investment Advisors in Columbus, Ohio, said of the oil-inspired rally. "We’ll have to wait and see if they follow through."

The Dow gained 29.10, or 0.3 percent, to 9,966.74. Earlier in the session, the Dow had been up 99 points from yesterday’s close.

Broader stock indicators were also moderately higher. The Standard & Poor’s 500 index rose 4.37, or 0.4 percent, to 1,093.56, and the Nasdaq composite index was up 15.50, or 0.8 percent, at 1,912.09, breaking past the 1,900 mark for the first time since last Friday.

For the week, the Dow finished 0.5 percent lower and the S&P was down 0.2 percent, while the Nasdaq gained 0.4 percent. It was the third straight week of losses for the Dow and S&P 500. The Nasdaq reversed a two-week slide.

It was also the first week the Dow finished below 10,000 since the week ended Dec. 5, 2003.

Investors were somewhat more inclined to buy after yesterday’s report of a lower-than-expected increase in the Conference Board’s Index of Leading Economic Indicators. The report indicated that the economy might not be overheating as much as feared, and Wall Street interpreted that as relieving some of the pressure on the Federal Reserve to raise interest rates.

The change in sentiment allowed investors to react enthusiastically to upbeat earnings reports for the first time in weeks. Wall Street largely had shrugged off companies’ solid first-quarter reports last month as investors were fixated on interest rates and the possibility that higher borrowing costs would erode results for the coming quarters.

Nordstrom Inc. surged $2.67 to $39.90 after beating Wall Street’s expectations with first-quarter profits that more than doubled on a 13 percent gain in sales at stores open more than a year.

Gap Inc. was up 7 cents at $22.58 following news that the clothing retailer boosted its first-quarter profits by 54 percent, matching analysts’ expectations.

Martha Stewart Living Omnimedia Inc. jumped 75 cents to $9.30.

Automaker General Motors Corp. slipped 38 cents to $43.08 after announcing it will cut 872 jobs at its Saturn plant in Delaware.