Posted on: Tuesday, June 21, 2005
Investors show no fear despite rise in oil prices
By Michael J. Martinez
Associated Press
NEW YORK — Wall Street slipped lower but still held on to most of its recent gains yesterday as investors, their confidence in the economy growing, reacted calmly to oil prices that approached $60 per barrel.
The concern over oil stymied hopes of continuing last week's stock advance, which saw the major indexes climb for five straight sessions. But Joseph Battipaglia, chief investment officer at Ryan Beck & Co., said investors — who have seen the risk of inflation dwindle and the economy remain on track — were handling the oil situation well.
"Everything else I see, aside from oil, is in place for a good run," Battipaglia said. "Inflation issues have been pretty much satisfied, the Federal Reserve is on a glide path to stopping their interest rate increases.
"Everything else looks good. Stocks aren't hugely cheap, but they're still cheap on a relative basis. So if we can get oil back down somewhat, we should be in good shape."
The bond market sold off on the oil concerns, with the yield on the 10-year Treasury note rising to 4.11 percent from 4.08 percent late Friday. The dollar made gains against most major currencies, and gold prices also rose.
Declining issues outnumbered advancers by about 9 to 7 on the New York Stock Exchange, where consolidated volume came to 1.74 billion shares, compared with 2.5 billion traded on Friday. Friday's heavy trading was due to the expiration of options and futures contracts.
Building on last week's surge in energy prices, crude oil futures reached a new intraday record of $59.52 per barrel, heightening worries that higher prices at the pump would hurt consumer spending and slow economic growth. A barrel of light crude settled at a record $59.37, up 90 cents, on the New York Mercantile Exchange.
