Wall Street closes up but off highs as oil rises

Source: Agencies  |   2008-6-13  |     ONLINE EDITION

WALL Street gave up a big early advance yesterday as the price of oil rose, with stocks closing moderately higher but demonstrating how anxious investors are about inflation and the overall health of the economy.

Word late in the session that Yahoo Inc called off talks of any deal with Microsoft Corp gave investors one more reason to rein in the enthusiasm that drove the day's early rally.

Advancing oil prices, which have frequently sent stocks tumbling in recent weeks, weighed on enthusiasm that followed a Commerce Department report that retail sales rose 1 percent in May. The gain marked the biggest improvement in six months and it offered some investors hope that the government's 57 million economic stimulus checks were indeed oiling the economy. A buyout bid for Anheuser-Busch Cos. also lifted stocks.

But the turnaround in oil set off renewed worries about inflation and its effect on the economy. And a management shakeup at Lehman Brothers Holdings Inc. drew fresh attention to troubles in the financial sector. Lehman, which earlier this week said it would report a quarterly loss of US$2.8 billion, yesterday ousted its chief financial officer and chief operating officer. Lehman fell US$1.05, or 4.4 percent, to US$22.70.

The Dow rose 57.81, or 0.48 percent, to 12,141.58. The Dow had been up by as much as 185 points in the session. The advance came a day after the stock market finished sharply lower because of surging oil prices. The fell almost 206 points Wednesday.

Broader stock indicators ended higher yesterday after dipping into negative territory late in the session. The Standard & Poor's 500 index rose 4.38, or 0.33 percent, to 1,339.87, while the Nasdaq composite index rose 10.34, or 0.43 percent, to 2,404.35.

Bond prices fell yesterday as some investors left the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its prices, jumped to 4.21 percent from 4.07 percent late Wednesday.