Stocks higher on Greenspan comments

Stocks got a lift from Federal Reserve Chairman Alan Greenspan Tuesday, rising modestly after he said the recent climb in oil prices was already curbing demand for crude. Oil futures dropped sharply on the news.

Speaking before a group of U.S. petrochemical producers, Greenspan said more refining capacity was needed around the world, but that energy demand was already starting to soften, a trend that could help bring prices down. That assessment of the oil situation, investors believed, could keep the Fed from raising rates aggressively, since it appeared unlikely that inflation would accelerate due to higher prices.

Analysts, however, said that for the short-term, Greenspan’s comments didn’t change the fact that oil, which traded above $58 a barrel on Monday, remains near record highs, and interest rates are on the rise, gradually or not. The result was a trendless session on Wall Street that showed only a modest response to Greenspan’s comments.

“Nothing has really changed for the market. You have rising rates, decelerating earnings growth and you’ve got energy prices,” said Russ Koesterich, senior portfolio manager at Barclay’s Global Investors in San Francisco. “Energy continues to be a drag on the market because, sure, you’re down $1 a barrel today, but these prices are still high and they’ll start to bite into consumer spending at some point.”

The Dow Jones industrial average rose 37.32, or 0.4 percent, to 10,458.46.

Broader stock indicators also moved higher. The Standard & Poor’s 500 index was up 5.27, or 0.4 percent, at 1,181.39, and the Nasdaq composite index gained 8.25, or 0.4 percent, to 1,999.32.

Crude oil futures dropped sharply after Greenspan’s remarks, with a barrel of light crude settling 97 cents lower at $56.04 on the New York Mercantile Exchange. Bonds were down narrowly, with the yield on the 10-year Treasury note rising to 4.47 percent from 4.46 percent late Monday. The dollar was narrowly mixed against other currencies, while gold prices rose.

Some investors sought bargains after March’s losses in the stock market. Many were still ambivalent and preferred to wait for next week, however, when first-quarter earnings reports start in earnest. Also, oil prices have not fallen enough to give investors a sense of lasting relief, even with Greenspan’s comments.

Advancing issues outnumbered decliners by about 4 to 3 on the New York Stock Exchange, where volume was moderate to heavy.

The Russell 2000 index of smaller companies was up 0.74, or 0.1 percent, at 614.50.

Overseas, Japan’s Nikkei stock average rose 0.92 percent. In Europe, Britain’s FTSE 100 was up 0.94 percent, Germany’s DAX index gained 0.49 percent, and France’s CAC-40 climbed 0.88 percent.