Stocks Up, Oil Price Ease Gives Relief

Mon Aug 16, 2004
By Rachel Cohen

NEW YORK (Reuters) - U.S. stocks climbed on Monday, getting a boost from lower oil prices after Venezuela's president declared he had survived a recall referendum, easing fears about the country's oil exports.

Time Warner Inc. (TWX.N: Quote, Profile, Research) helped push up the Standard & Poor's 500 index after business weekly Barron's said the media and entertainment company still faces some formidable challenges, but a new management team led by Chief Executive Richard Parsons is laying the groundwork for a powerful revival.

Lowe's Cos. Inc. (LOW.N: Quote, Profile, Research) , the No. 2 home improvement retailer, also helped push the S&P 500 higher after it reported an 18 percent increase in second-quarter profit even though results trailed estimates as sales weakened in June.

With crude futures above $46 a barrel, oil is the focus for most investors but they derived some solace from news that Venezuelan President Hugo Chavez said he survived a recall vote, easing some fears that unrest may disrupt oil exports from the world's fifth-largest crude exporter.

The steady rise in oil prices has put pressure on the market in recent weeks as it pushes through record highs, but the relief in prices on Monday helped the stock market.

"Oil for sure has been a key driver and any time we get a down move in oil that is positive," said Tim Heekin, director of trading at San Francisco investment bank Thomas Weisel Partners. "The markets are going to react to that. It's probably a combination of some technical factors and oil being a little bit weaker today."

The Dow Jones industrial average rose 99.77 points, or 1.02 percent, to 9,925.12. The broader Standard & Poor's 500 Index was up 11.5 points, or 1.08 percent, at 1,076.30. The technology-laced Nasdaq Composite Index gained 24.03 points, or 1.37 percent, to 1,781.25.

Venezuelan electoral authorities said Chavez survived a recall referendum, winning over 58 percent of the vote with 94 percent of the votes counted. But opposition leaders claimed the same margin of victory, saying the results were a fraud engineered through the use of electronic voting machines. International observers have yet to give their verdict.

Light crude futures fell 28 cents to $46.30 a barrel, still not far off record highs.

Crude oil is a vital ingredient in the production of most goods and services as well as transport. Price fluctuations ripple through the U.S. economy, hurting profits at most companies whenever the price soars.

Retailer Kmart Holding Corp. (KMRT.O: Quote, Profile, Research) gained after it reported its third consecutive quarterly profit as cost cuts made up for slumping sales.

Kmart rose $8.94, or about 14 percent, to $73.84.

Lowe's was up $2.40, or 5.1 percent, to $49.05 on the New York Stock Exchange.

Time Warner gained 61 cents, or 3.9 percent, to $16.23.

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