Posted on: Wednesday, April 6, 2005
Greenspan view on oil pushes stocks higher
By Michael J. Martinez
Associated Press
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 curbing demand for crude. Oil futures dropped sharply on the news.
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.
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. Bonds were down narrowly, with the yield on the 10-year Treasury note rising to 4.47 percent. The dollar was narrowly mixed against other currencies. Gold prices rose.
Advancing issues outnumbered decliners by about 4-to-3 on the Big Board, where preliminary consolidated volume came to 1.88 billion shares, compared with 2.09 billion traded Monday.
Speaking before a group of U.S. petrochemical producers, Greenspan said that more refining capacity was needed worldwide, but that energy demand was already starting to soften, a trend that could help bring prices down. That assessment, investors believed, could keep the Fed from raising rates aggressively, since it appeared unlikely that inflation would accelerate.
