US stocks rose this week on expectations the Federal Reserve may slow the pace of rate increases amid signs damage caused by Hurricane Katrina may further slow the pace of economic growth.
Energy companies, including the Exxon Mobil Corp and ConocoPhillips, rose for the week as crude oil prices climbed to records, sending gasoline prices above $3 a gallon. Refiners were the top performing sector among the 25 groups of the Standard & Poor's 500 Index this week, advancing 21 percent.
Home builders and other construction companies, such as Caterpillar Inc, also rose on expectations the companies will benefit from reconstruction and relief efforts in the storm-stricken US Gulf Coast. Cement makers rose 10.6 percent this week, while construction and engineering stocks advanced 5.6 percent.
Caterpillar was up 2.3 percent to $58.26 on Friday.
"Hurricane Katrina and the magnitude of the destruction in the Gulf Coast may give the excuse for the Fed to pause with raising interest rates," said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York, with $800 million in stocks. "That is enough to keep demand for stocks high amid a string of bad news."
For the week, the Dow Jones industrial average rose 0.5 percent, while the S&P climbed 1.1 percent. The Nasdaq advanced 1 percent.
Stocks closed lower on Friday as energy shares, like Exxon Mobil Corp, declined after the promise of fuel aid in the wake of Hurricane Katrina drove crude oil prices down.
The Dow was down 12.26 points, or 0.12 percent, at 10,447.37. The broad S&P 500 was down 3.57 points, or 0.29 percent, at 1,218.02. The technology-laced Nasdaq Composite Index was down 6.83 points, or 0.32 percent, at 2,141.07.
US crude oil futures fell $1.90 to $67.57 a barrel on the New York Mercantile Exchange. Earlier in the week it traded above $70 a barrel, an all-time record. On Friday, Energy Secretary Sam Bodman announced the Paris-based International Energy Agency will tap emergency fuel reserves to help the United States. The US government also said it would offer 30 million barrels of crude from its emergency stockpile and loan 9.1 million barrels to refiners. "The move eased immediate concerns about oil supply," said Ghriskey. "Oil stocks went off a bit, but for the rest of the market it worked as a relief."
Exxon shares fell 1.9 percent to $60.49 on Friday and ConocoPhillips dropped 3.1 percent to $66.86. Exxon ended the week up nearly 4 percent, while Conoco gained almost 8 percent. S&P's group of oil services companies advanced 6.1 percent since Monday. Expectations about the pace of further interest rate increases came as President George W. Bush met with Fed Chairman Alan Greenspan at the White House on Thursday. Policy makers have raised the benchmark lending rate 10 times since June 2004 to 3.5 percent.
One estimate of Katrina's impact on the economy by Risk Management Solutions, a private company, put the toll from the hurricane at more than $100 billion.
On Friday, Albertsons Inc surged 11.9 percent to $23.19 after the retailer said it was putting itself up for sale.
Trading was moderate on the New York stock exchange on Friday, where declining stocks beat gainers by less than 2 to 1. About 1.26 billion shares were traded, below the 1.46 billion daily average for last year.
On Nasdaq, declining stocks also outnumbered gaining stocks by less than 2 to 1, and about 1.15 billion shares changed hands, below the 1.81 billion daily average.
US financial markets will be closed on Monday to observe the Labour Day holiday.
Comments
Comments are closed.