Investors bullish
on oil price drop

NEW YORK >> Wall Street extended its fourth-quarter rally into a second day yesterday, supported by falling oil prices and a bullish assessment of the economy from a Federal Reserve official.

Investors were cheered by a dip in oil prices, which backed off the $50 per barrel mark at Friday's close of trading. A barrel of light crude closed at $49.91, down 21 cents, on the New York Mercantile Exchange.

Stocks received a boost before the session opened when Philadelphia Federal Reserve President Anthony Santomero said in a speech he expected the economy to grow by 3.5 percent to 4 percent through 2005. His comments and the buying that customarily opens a new quarter gave stocks their gains -- although analysts said recent economic data and the forecast for third-quarter earnings might not support the bullishness.

"You've had some fundamental chinks in the armor that have shown themselves over the week, with the economic data and the pre-announcement warnings we've seen," said Chris Johnson, manager of quantitative analysis at Schaeffer's Investment Research. "This buying is kind of disconnected from that, and it should come back to earth in a few days."

The Dow Jones rose 23.89, or 0.2 percent, to 10,216.54, its second straight positive session. The Dow climbed 112.38 on Friday. Broader stock indicators were moderately higher. The Standard & Poor's 500 index was up 3.67, or 0.3 percent, at 1,135.17, and the Nasdaq composite gained 10.20, or 0.5 percent, to 1,952.40.

With the market having advanced four of the last five sessions, investors were growing optimistic about a fourth-quarter rally, and were looking past third-quarter earnings, which many expect to be disappointing. But Friday's monthly job creation report, one of the most closely watched reports on the economy, will likely shape trading for weeks to come.

"I think the third quarter earnings are already priced in, so any surprises we get out of there will be a positive for the market," said Neil Massa, equity trader at John Hancock Funds. "We also have the jobs figure on Friday, and that has the potential to be either really good for the market, or spark a major selloff."

The U.S. Commerce Department reported a slim 0.1 percent decrease in factory orders in August, less than the 0.1 percent increase forecast on Wall Street. However, the department boosted July's factory order hike to 1.7 percent, up from 1.3 percent, showing that the nation's factories continued to produce at a high rate even during the worst of the summer's economic slowdown.

Dow component American International Group Inc., one of the world's largest insurance firms, slipped 23 cents to $68.49 after it announced the Securities and Exchange Commission may sue the company for alleged violations of federal securities laws, based on allegedly misleading statements AIG made in recent press releases.