Modest rise for Dow despite oil worries

Wall Street got a badly needed break from oil price worries today, with stocks rising modestly as Saudi Arabia indicated that OPEC should increase its daily output.

But the Dow Jones industrial average finished the week under the 10,000 mark for the first time this year.

Wall Street’s preoccupation with skyrocketing oil prices and their effect on inflation was relieved somewhat when Saudi Arabia proposed raising OPEC’s production ceiling by more than two million barrels a day. Crude oil futures dropped 87 cents to 39.93dollars a barrel in late trading.

But analysts cautioned that this is just a proposal, and might not be approved when OPEC ministers next meet in June. That tentativeness was reflected by yet another day of very light volume on the major markets.

“I view it as temporary,” Ryan Smith, managing director of equity trading at Banc One Investment Advisors in Columbus, Ohio, said of the oil-inspired rally. “We’ll have to wait and see if they follow through.”

The Dow gained 29.10, or 0.3%, to 9,966.74. Earlier in the session, the Dow had been up 99 points from Thursday’s close.

Broader stock indicators were also moderately higher. The Standard & Poor’s 500 index rose 4.40, or 0.4%, to 1,093.59, and the Nasdaq composite index was up 15.50, or 0.8%, at 1,912.09, breaking past the 1,900 mark for the first time since last Friday.

For the week, the Dow finished 0.5% lower and the S&P was down 0.2%, while the Nasdaq gained 0.4%. It was the third straight week of losses for the Dow and S&P 500. The Nasdaq reversed a two-week slide.

It was also the first week the Dow finished below 10,000 since the week ended December 5, 2003.

Investors were somewhat more inclined to buy after Thursday’s report of a lower-than-expected increase in the Conference Board’s Index of Leading Economic Indicators.

The report indicated that the economy might not be overheating as much as feared, and Wall Street interpreted that as relieving some of the pressure on the Federal Reserve to raise interest rates.

The change in sentiment allowed investors to react enthusiastically to upbeat earnings reports for the first time in weeks. Wall Street largely had shrugged off companies’ solid first-quarter reports last month as investors were fixated on interest rates and the possibility that higher borrowing costs would erode results for the coming quarters.

But many analysts were questioning whether today’s improvement in investor sentiment can be sustained with so many unresolved issues and problems in the United States and overseas.

Gap Inc. was up 7 cents at 22.58dollars following news that the clothing retailer boosted its first-quarter profits by 54%, matching analysts’ expectations.

Martha Stewart Living Omnimedia Inc. jumped 75 cents to 9.30dollars after a government witness at Martha Stewart’s trial was charged with perjury for allegedly making false statements on the stand, sparking speculation on Wall Street that Stewart’s conviction could be reversed.

Automaker General Motors slipped 38 cents to 43.08dollars after announcing it will cut 872 jobs at its Saturn plant in Delaware.

SBC Communications Inc. was up 2 cents at 24.33dollars following a strike by 100,000 workers who walked off the job early Friday to protest the phone company’s latest contract offer.

Advancing issues outnumbered decliners by about 8 to 5 on the New York Stock Exchange, where volume was light.

The Russell 2000 index of smaller companies was up 5.06, or 0.9%, at 545.81.