updated 8/23/2004 7:13:15 AM ET 2004-08-23T11:13:15

A welcome slide in oil prices set off a relief rally on Wall Street Friday, with stocks posting a healthy advance as crude approached but then fell back from the $50 a barrel mark. The major indexes all ended the week higher.

Major Market Indices

Stock investors seemed to regain some confidence as crude retreated from a record intraday high of $49.40 a barrel on the New York Mercantile Exchange and closed down $1.10 at $47.60. Wall Street has struggled the past few weeks with fears that skyrocketing oil prices could spur inflation, raise consumer prices and put a large dent in third-quarter earnings reports.

But some of Friday’s buying, which came on light volume, was also due to bargain hunting.

“Fundamentally, if you look at the profit picture and the economy, I’m not surprised we’re getting a bounce off of our recent lows,” said Joseph Battipaglia, chief investment officer at Ryan Beck & Co. “Despite all the negatives with oil and terrorism, the market is trying to put in a stand here.”

The Dow Jones industrial average was up 69.32, or 0.7 percent, at 10,110.14.

Broader stock indicators also moved posted solid gains. The Standard & Poor’s 500 index was up 7.12, or 0.6 percent, at 1,098.35, and the Nasdaq composite index gained 18.12, or 1 percent, to 1,838.01.

For the week, the Dow was up 2.9 percent, the S&P 500 rose 3.2 percent, and the Nasdaq jumped 4.6 percent. It was the second straight up week for the Dow and S&P 500, and the Nasdaq reversed two weeks of losses.

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Friday’s trading continued the pattern of the past few weeks, with stocks falling as oil continued to climb and vice versa. With global demand growing, the recent threats against Iraq’s oil infrastructure by insurgents have unnerved investors despite OPEC’s promises to increase production.

However, with crude hitting an intraday high Friday, stocks continued to rise, giving investors hope that oil prices and stocks might finally uncouple. Analysts cautioned that it was too soon to tell if the pattern was truly broken or not.

Wall Street’s biggest fear is that rising energy prices will further increase the costs of shipping goods to market, thus driving up prices for consumers who are themselves hard hit by high gasoline prices. With fewer consumers shopping and higher costs for corporations, earnings for the current quarter, which ends next month, could falter.

The week’s gains, however, marked by two 100-point surges in the Dow, pushed the Dow over 10,100 and left the S&P 500 close to the 1,100 mark — key levels that, if sustained next week, could lead to further buying. And should oil prices continue to fall, the stock market could respond even more favorably as September arrives and the traditionally low-volume summer season ends.

“If the concerns that have been plaguing the late summer market over oil prices drop off, and if the economic news continues to be decent, we have all the pieces in place for a nice fall rally,” said Brian Bruce, director of global investments, PanAgora Asset Management Inc. in Boston.

Online search engine Google Inc. continued to see strong demand a day after its debut on Nasdaq. Google, which was offered at $85 per share and closed Thursday at $100.34, was up $7.98, or 8 percent, at $108.31.

Google’s competitors benefited from investors new enthusiasm with the technology sector. Yahoo! Inc. rose 50 cents to $28.61, while Ask Jeeves Inc. gained $1.70 to $27.74.

Clothing chain Gap Inc. said disappointing summer sales and its debt burden kept its earnings lower, though the company managed to beat reduced Wall Street expectations by 3 cents per share. Gap gained 47 cents to $20.62.

High-end department store chain Nordstrom Inc. tumbled $3.74 to $36.82 after reporting a 62 percent jump in profits, but the company missed analysts’ earnings estimates by 2 cents per share.

Software company Novell Inc. fell 13 cents to $6.26 after returning to profitability in the second quarter, but missed Wall Street expectations on its earnings by a penny per share.

Healthcare provider Aetna Inc. agreed to acquire Strategic Resource Co., a privately held health benefits administrator, for $250 million. Aetna rose $1.78 to $94.23.

Advancing issues outnumbered decliners by more than 3 to 1 on the New York Stock Exchange, where volume came to 1.19 billion shares, compared to 1.25 billion at the same point Thursday.

The Russell 2000 index of smaller companies was up 10.48, or 2 percent, at 547.92.

Overseas, Japan’s Nikkei stock average fell 0.1 percent. In Europe, Britain’s FTSE 100 closed up 0.2 percent, France’s CAC-40 slipped 0.2 percent for the session and Germany’s DAX index dropped 0.3 percent.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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