NEW YORK – U.S. stocks rallied to a sharply higher close Monday as investors looked past Hurricane Katrina to focus on economic fundamentals, though International Paper, Allstate and others were sent lower by worries about the storm’s financial impact.
The Dow Jones Industrial Average ($INDU) closed up 65.76 points at 10463.05, the S&P 500 ($SPX) ended up 7.18 points at 1212.28 and the Nasdaq composite ($COMPX) was up 16.88 points at 2137.65.
There were more than 1.2 billion shares traded on the New York Stock Exchange, where advancing stocks outnumbered decliners by 20 to 11. On the Nasdaq market more than 1.2 billion shares were traded and rising stocks outnumbered falling shares 17 to 12.
Stocks Monday opened lower amid worries that Hurricane Katrina could devastate New Orleans and severely curtail Gulf of Mexico oil production.
However, the market managed to move into positive territory after the first half hour of trading, as crude futures stayed well below the record $70.80 a barrel level struck overnight. The October crude futures contract closed up $1.07 at $67.20 a barrel.
During the afternoon, Katrina weakened to a Category 1 storm after making landfall near Grand Isle, La., early Monday. The hurricane, which initially was classified a Category 5 storm, had been widely expected to spark a sell-off on Wall Street.
Analysts said shut-ins of oil production facilities will push crude prices higher, putting stocks under further pressure.
The benchmark Treasury 10-year note last was up 1/32 at 100 23/32 with a yield ($TNX) of 4.16 percent. lifted by safe-haven interest linked to the storm and the record high oil price.
The dollar was higher as traders awaited more precise news about Katrina’s impact. The dollar last traded up 0.4 percent at 110.62 yen, as the euro fell 0.05 percent to $1.2228.
December gold last finished down 70 cents at $441.40 an ounce, after earlier rising on storm-related concerns.
September natural gas closed up nearly 10 percent at $10.847 per million British thermal units, after trading above $12 overnight. The Nymex was forced to declare that natural-gas deliveries for August have been halted for an indeterminate amount of time due to storm-linked supply interference.
Airline stocks were roiled by worries that higher oil prices will force carriers to charge more for tickets. American Airlines parent AMR Corp. (AMR) closed down 1.9 percent.
Paper stocks were hit by worries that Katrina could shut chunks of U.S. paper-making capacity. International Paper (IP) lost 1 percent of its value.
Predictions that the storm will compel Gulf Coast consumers to buy goods to repair their homes lent support to home-improvement retailers. Home Depot (HD) closed 1.8 percent higher and Lowes Cos. (LOW) rose 2.3 percent.
Insurance stocks were pressured as investors awaited early loss estimates from Katrina. According to Lehman Brothers, insurances companies with high storm exposure relative to book value include Renaissance Re (RNR), which closed down 1.6 percent and Allstate (ALL), which lost 1.3 percent.
PanAmSat (PA) bolted 20 percent higher after Intelsat Ltd. said it agreed to buy PanAmSat Holding Corp. for $3.2 billion, or $25 a share, to create the world’s largest commercial-satellite fleet.
In other news, Per-Se Technologies Inc. (PSTI) and Wolters Kluwer agreed to buy NDCHealth Corp (NDC) in a deal valued at $1 billion. Shares of NDC jumped up 6.6 percent.
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AP-NY-08-29-05 1745EDT
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