Closing Market Report
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Broader stock indexes fall on higher oil prices
By Ellen Simon
Associated Press
NEW YORK » Stocks closed mixed yesterday as strong earnings from Alcoa Inc. led the Dow Jones industrials slightly higher but the Nasdaq gave up early gains as rising oil prices renewed worries about inflation and recession.
Solid earnings and outlooks from a handful of companies helped the Dow, which rose after aluminum maker Alcoa reported higher profits despite rising energy costs and lower prices for aluminum. But the gains narrowed in afternoon trading as broader indexes fell and oil prices climbed.
Traders continue to look anxiously for signs that higher energy costs will depress corporate earnings and oil prices stoked that nervousness. A barrel of light crude settled at $63.53, up $1.73, in trading on the New York Mercantile Exchange.
The markets' behavior is typical of an aging bull market, and this bull market, now in its fourth year, is aging, said Charles H. Blood Jr., senior financial markets analyst at Brown Brothers Harriman & Co.
"Things are just more erratic, they take longer, they're not as decisive," he said.
The Dow rose 14.41, or 0.14 percent, to 10,253.17. The Dow lost 276.36 points, or 2.62 percent, last week, and fell another 53 points Monday.
Broader stock indicators were slightly lower. The Standard & Poor's 500 index fell 2.46, or 0.21 percent, to 1,184.87, and the Nasdaq composite index fell 17.83, or 0.86 percent, to 2,061.09.
Bonds also fell, with the yield on the 10-year Treasury note at 4.39 percent, up from 4.37 percent late Friday.
"We have decent economic growth, but the Fed's tightening," Blood said. "Earnings should be good, but rising interest rates are putting a little bit of pressure on valuation."
Investors got another signal that the Federal Reserve's tightening of short-term interest rates to stave off inflation would continue. In minutes released from its Sept. 20 closed-door discussions, Fed officials said they felt the need to keep boosting interest rates in September partly out of concern that a pause might mislead people into thinking the Fed was too worried about the economic impact of Hurricane Katrina.
The minutes also said the economy might get a lift next year as the Gulf Coast continues to rebuild after Hurricanes Katrina and Rita.
Alcoa rose 19 cents to $22.85 after it said its profits, released after the close of trading Monday, were 2 percent higher than a year ago, despite surging energy costs and lower aluminum prices. The company saw additional income in the fiscal third quarter after selling some railroad assets and has also been eliminating jobs.