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The Honolulu Advertiser

Posted at 11:21 a.m., Friday, October 29, 2004

Mixed finish caps big month for Wall Street

By Michael J. Martinez
Associated Press

NEW YORK — Wall Street ended an otherwise stellar week with a mixed finish today after the government's gross domestic product report renewed concerns that high energy prices and a lack of jobs are holding back economic growth.

Third-quarter GDP rose by 3.7 percent, according to the Commerce Department, less than the 4.3 percent rise Wall Street expected. However, the figure was stronger than the 3.3 percent growth in the second quarter.

"It's not bad in a historical context, but for us to generate any meaningful job growth, we're going to have to do better than that," said Daniel Portanova, managing director at Gartmore Separate Accounts in Irivington, N.Y. "This isn't enough to really do much for the equity markets."

Soaring oil prices in the third quarter were partly to blame for the slower-than-expected growth, analysts said. As oil climbed through the $55 per barrel mark in October, investors feared a further slowdown for the fourth quarter as well. A barrel of light crude was quoted at $51.76, up 84 cents, on the New York Mercantile Exchange.

According to preliminary calculations, the Dow Jones industrial average rose 22.93, or 0.23 percent, to 10,027.47 — its fourth straight gain and the Dow's first four-day gain since mid-August.

Broader stock indicators were narrowly mixed. The Standard & Poor's 500 index was up 2.76, or 0.24 percent, at 1,130.20, and the Nasdaq composite index lost 0.75, or 0.04 percent, to 1,974.99.

A sharp drop in oil prices this week helped stocks regain much of the ground lost earlier in the month, with the Dow posting back-to-back triple-digit gains on Tuesday and Wednesday, the first time since May 2003 that the blue chips accomplished such a feat. For the week, the Dow rose 2.76 percent, the Nasdaq climbed 3.13 percent and the S&P 500 added 3.14 percent.

Stocks finished the month surprisingly strong. As crude oil futures rose throughout October, stocks fell precipitously, setting new year-to-date lows on the Dow. Only this week's gains salvaged the month's trading — for the month, the S&P 500 added 1.4 percent and the Nasdaq surged 4.12 percent, while the Dow lost 0.52 percent.

On a historical note, research by the Hirsch Organization, publisher of the Stock Trader's Almanac, found that in election years when the Dow posted a loss of 0.5 percent or more for the month of October, all incumbent candidates have lost. Like the election itself, however, the Dow's performance this year might be too close to call.

Even as oil prices stabilized at $51 to $52 per barrel, many investors still remained on the sidelines as the elections loomed closer, waiting to see whether a candidate would emerge as the front-runner over the weekend or whether another contested election, like 2000, was in the offing.

"Oil's up, we had some economic numbers that were not great, and we're still seeing the market hanging in there," said Todd Leone, managing director of equity trading at SG Cowen Securities. "You'll probably see some people try to make a few bets between now and Tuesday, but there's a lot of people just waiting to see what happens."