Stocks, Bonds, Oil Rise as Markets Stabilize
NEW YORK (AP) _ The nation’s financial markets stabilized Thursday amid flickering Middle East peace hopes. Stocks and bonds rose, oil prices inched higher, and the dollar and gold declined.
″Perceptions have been turning on a dime and that’s what we went through again,″ said Maria Ramirez of Ramirez Capital Consultants Inc. ″There is positive hope out there - but nobody knows.″
Much of the slower volume and jittery trading was attributed to apprehension after a wild ride Wednesday, when the markets erupted in a frenzy after the announcement that U.S.-Iraqi peace talks had failed.
Stocks recorded their first gain of the new year as the Dow Jones industrial average rose 28.46 points to 2,498.76 after falling 39.11 points on Wednesday.
But trading slowed as war fears persisted following the failure of talks in Geneva between Secretary of State James A. Baker III and Iraqi Foreign Minister Tariq Aziz. The United Nations has set a Jan. 15 deadline for Iraq to evacuate Kuwait.
New York Stock Exchange volume totaled a slim 124.51 million shares, down from 191.10 million a day earlier.
″Moods turned rather positive in the aftermath of (Wednesday’s) scare,″ said Sara Cerato, a vice president for equity sales with Nomura Securities International Inc. ″I think people are trying to analyze their way into a bullish frenzy here.″
But she cautioned: ″They could take all of this away from us. This is not a trend. The trend is volatility.″
In the oil market, crude oil for next-month delivery ended the day up 45 cents at $27.72 per barrel.
Prices had risen as much as $1.65 a barrel during the day on war fears but fell back partly on speculation that U.N. Secretary General Javier Perez de Cuellar’s planned weekend visit to Iraq may produce a diplomatic solution.
Also adding to market beliefs that war could be averted was talk that France may attempt to broker a settlement.
″Most people now feel the U.N. or maybe France can pull a rabbit out of a hat,″ Cerato said.
Bond prices shot up on the possibilities of an 11th-hour peace in the 5- month-old crisis. The government’s benchmark 30-year Treasury bond jumped $15 per $1,000 in face amount, dropping its yield to 8.32 percent.
The bond had fallen more than $8 on Wednesday. Inflation that would be caused by higher oil prices during a war would erode the value of bonds, so the chance for peace sends prices higher.
The dollar, which strengthed Wednesday on perceptions it is a safe haven during tumult, slipped Thursday against most foreign currencies in quiet dealings.
Currency dealers said trading was mostly follow-through from volatile overnight action in Asia, when foreign traders drove the dollar down and then up amid conflicting sentiments about chances for peace in the Persian Gulf.
Gold fell slightly in New York after rising overseas. It dipped 80 cents a troy ounce to $390.40 on New York’s Commodity Exchange.