Stocks rally despite record oil prices

Wall Street rallied Monday after Hurricane Katrina weakened, easing concerns about refinery outages along the Gulf of Mexico and pulling oil prices back from record highs.

Stocks opened lower but quickly rebounded as crude oil futures cooled after surging past $70 a barrel in early trading on news that the storm shut down about 8 percent of U.S. refining capacity. A barrel of light crude settled at $67.20, up $1.20 on the New York Mercantile Exchange.

Investors found some relief in reports that President Bush was mulling whether to offset the supply disruption with oil from the nation’s petroleum reserve, but energy and insurance stocks still came under pressure as the market attempted to gauge the hurricane’s financial impact.

Jim Dunigan, chief investment officer for PNC Advisors, said the market had been braced for the storm’s blow and started looking elsewhere for direction after the Gulf Coast got “hit full force and survived.”

“It’s not likely this is going to have a significant impact on growth,” Dunigan said. “If it’s not going to have a significant impact on energy, we’re still in pretty good shape.”

According to preliminary calculations, the Dow Jones industrial average climbed 65.76, or 0.63 percent, to close at 10,463.05. Last Friday, the Dow had its lowest close in seven weeks.

The broader stock indicators also moved higher. The Standard & Poor’s 500 index gained 7.18, or 0.6 percent, to 1,212.28, and the Nasdaq composite index rose 16.88, or 0.80 percent, to 2,137.65.

Bonds rose, with the yield on the 10-year Treasury note falling to 4.17 percent from 4.19 percent Friday. The U.S. dollar was mixed against other major currencies in European trading, while gold prices crept higher.

Much of Wall Street’s advance came at midday, when Katrina was downgraded to a Category 2 storm. With Katrina passing through the heart of the United States’ oil and gas infrastructure, the market weighed a spike in energy prices against the potential for long-term production outages. The storm forced the Louisiana Offshore Oil Port — the nation’s largest import terminal — to evacuate workers and stop unloading ships over the weekend.

“Clearly it’s going to have some impact on the market if there is damage that will keep [the port] closed,” said John Caldwell, chief investment strategist for McDonald Financial Group.

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ExxonMobil Corp. gained as much as 83 cents in early activity, but in the afternoon was down 13 cents to $58.28, while Chevron Corp. rose 18 cents to $59.56 and BP Plc added 12 cents to $66.24. Offshore drilling contractor Halliburton Co. jumped 79 cents to $58.05.

Home Depot Inc. and Lowe’s Cos. also advanced on optimism that consumers spent more at the home improvement stores as they readied their homes for the hurricane, and that they’d be buying materials to repair storm damage. Home Depot climbed 80 cents to $40.61, and Lowe’s rose $1.44 to $64.62.

However, insurance stocks took a hit after early projections put total storm losses near $25 billion, which would rank Katrina among the nation’s costliest storms. Allstate Corp. dropped 81 cents to $57.14, RenaissanceRe Holdings Ltd. retreated 74 cents to $45.51 and Everest Re Group Ltd. lost 15 cents to $93.72.

Elsewhere on the market, acquisitions lifted some stocks higher. PanAmSat Holding Corp. agreed to be acquired by privately held Intelsat Ltd. for $3.2 billion in cash, forming the world’s biggest commercial satellite fleet. The $25 per share offer is a 25 percent premium to PanAmSat’s closing price of $19.80 on Friday. PanAmSat surged $4.03 or 20.4 percent, to $23.83.

Per-Se Technologies Inc. and Dutch publisher Wolters Kluwer said they are buying NDCHealth Corp., a maker of software for processing health-care claims and prescription data, in two separate deals totaling $700 million in cash and stock, plus the assumption of $270 million in debt. Per-Se slipped 55 cents to $19.49, while NDC added $1.16 to $18.93.

The Russell 2000 index of smaller companies rose 4.56, or 0.71 percent, to 653.20.

Overseas, Japan’s Nikkei stock average fell 1.04 percent, Germany’s DAX index climbed 0.59 percent, and France’s CAC-40 rose 0.43 percent.