Posted on: Thursday, May 12, 2005
Decline in oil prices drives stocks higher
By Peter Svensson
Associated Press
NEW YORK — A late-session rally fed by falling oil prices pushed stocks higher yesterday, although Wall Street's mood remained tentative because of uncertainty about the economy.
News about the trade deficit, which shrank to its lowest level in six months, also encouraged investors. The Commerce Department reported that the surge of textile shipments from China slowed. The deficit narrowed by 9.2 percent to $54.99 billion, down from the record monthly deficit of $60.57 billion set in February.
Stocks took a dive around mid-day after the White House and Capitol were evacuated when an aircraft strayed off course. Once the plane was diverted away from Washington, the major indexes began to rise slowly.
Contributing to investors' uncertainty were comments by the president of the Federal Reserve Bank of St. Louis, William Poole, who is also a member of the Fed's rate-setting committee. He was quoted by Dow Jones News-
wires as saying the Fed's stated intent to raise rates at a measured pace "should not be viewed as an ironclad commitment."
The statement, while nuanced, raised the specter of stagflation — inflation rising even as economic growth starts to slow.
Advancing issues barely outnumbered decliners on the New York Stock Exchange, where preliminary consolidated volume came to 1.83 billion shares, compared with 1.89 billion Tuesday.
The drop in oil prices — coming as the U.S. government reported a larger-than-expected stockpile of oil and gasoline — removed a key obstacle for stocks to move higher. A barrel of light crude settled at $50.45, down $1.62, on the New York Mercantile Exchange.
