US stocks: Markets rise after storm weakens

NEW YORK - US stocks rose on Monday as Hurricane Katrina weakened after hitting the US Gulf Coast and investors bet the storm did less damage than had been feared, particularly to oil facilities in the region.

Oil prices trimmed gains after trading above US$70 a barrel overnight as the storm weakened, reversing stocks opening decline.

Shares of home-improvement retailers rose on expectations that demand for building materials would rise in the storm's wake. Home Depot Inc., the No. 1 home improvement retailer, rose 1.8 per cent to US$40.54 while No. 2 Lowe's Cos. Inc. advanced 2.2 per cent to US$64.60 on the New York Stock Exchange.

"Everybody was expecting this hurricane to be one of biblical proportions and that oil prices were going to climb sharply," said Angel Mata, managing director of listed equity trading at Legg Mason Wood Walker in Baltimore. "As the storm weakened, oil prices retreated and demand for stocks rebounded."

The Dow Jones industrial average was up 65.76 points, or 0.63 per cent, at 10,463.05. The Standard & Poor's 500 Index was up 7.18 points, or 0.60 per cent, at 1,212.28. And the technology-laced Nasdaq Composite Index was up 16.88 points, or 0.80 per cent, at 2,137.65.

Oil futures ended up US$1.07 to US$67.20 a barrel on the New York Mercantile Exchange after hitting a record high US$70.80 overnight.

Energy companies' shares, which earlier had risen, pared some of those gains as oil prices receded. ConocoPhillips finished up 1.92 per cent to US$63.07 and oil-field services company Halliburton Co. gained 0.94 per cent to US$57.80 on the NYSE.

The US economy has been resilient to the increase in oil prices, Bob Doll, chief investment officer of Merrill Lynch Investment Managers, said in a note to clients.

"Rising energy prices so far had surprisingly little impact on consumer spending and corporate profits," he said. "Some observers have argued that the boom in energy prices has helped energy company profits, offsetting the negative impact the high prices have had on nonenergy-related companies."

The US National Hurricane Center downgraded Hurricane Katrina to a Category 1 storm with winds of 95 mph. Katrina made landfall near the Louisiana-Mississippi border and was moving north in Mississippi.

Still, Katrina may be the most expensive hurricane ever to hit the United States, costing insurers up to US$26 billion, storm modelers said.

Shares of insurance companies fell, including St. Paul Travelers Co., which slid 47 cents to US$44.27, and Allstate Corp., which dropped 1.3 per cent to US$57.18.

Shares of gaming companies with operations in storm-affected regions were lower. Isle of Capri Casinos, which operates riverboat casinos, were off 2.73 per cent to US$23.52 on the Nasdaq. ID:nN29192931

Some of the biggest boosts to the Nasdaq came from chip maker Intel Corp. and auction website eBay Inc.. Intel shares rose 1.26 per cent to US$25.73 and eBay gained 50 cents to US$39.47.

"Demand has been high for tech stocks, and most of them are up today," said Jay Finkel, a senior equity trader at Lord, Abbett & Co. in Jersey City, New Jersey.

Satellite operator Intelsat Ltd. said it agreed to buy rival PanAmSat Holding Corp. for US$3.2 billion, creating the world's largest commercial satellite fleet. Shares of PanAmSat soared 20.2 per cent to US$23.80. ID:nN29176152

Trading was light on the New York Stock Exchange where gainers beat decliners by about 5 to 3. About 1.2 billion shares were traded, below the 1.5 billion daily average for last year.

On Nasdaq, gainers outnumbered decliners by a ratio of about 3 to 2, with about 1.3 billion shares changing hands, below the 1.8 billion daily average last year.

- REUTERS