updated 9/30/2004 9:46:29 AM ET 2004-09-30T13:46:29

Stocks extended their gains into a second day Wednesday as investors digested a jump in the second-quarter gross domestic product while keeping a close eye on falling oil prices. The tech-dominated Nasdaq composite index posted an especially robust advance.

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Investors saw the Commerce Department report, which said the nation’s GDP grew 3.3 percent from April to June, as fairly good news, with a few caveats. While the GDP figure was revised upward from a previous estimate of 2.8 percent, it still marked the slowest period of economic growth since the first quarter of 2003.

Consumer spending, however, grew at an annual rate of just 1.6 percent in the second quarter, the lowest level in three years. Economists fear uncomfortably high crude prices, which topped $50 per barrel Tuesday, could further hamper consumer spending.

“The economy seems to be on a decent growth path, but it’s being held back by high energy prices, and that’s likely to keep the stock market in this trading range that we’ve been in over the past eight or nine months now,” said Ken Tower, chief market strategist for Schwab’s CyberTrader. “For an upside breakout, we’ll need a steady decline in oil prices. For a downside breakout, any number of things are possible, including an actual oil shortage, which we thankfully don’t have right now.”

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The Dow Jones industrial average finished up 58.84, or 0.6 percent, at 10,136.24, adding to an 88-point gain Tuesday. The Standard & Poor’s 500 index rose 4.74, or 0.4 percent, to 1,114.80.

The Nasdaq surged 24.07, or 1.3 percent, to 1,893.94, partly on enthusiasm over the potential acquisition of travel site Orbitz Inc. Buying in the chip sector, oversold after weeks of downgrades and third-quarter warnings, also buoyed tech shares. The Philadelphia Semiconductor index was up 1.9 percent.

“Basically we’re seeing some quarter-end bargain hunting for semiconductors after an abysmal performance on the quarter for tech stocks in general,” said David Hegarty, head trader at Commerzbank Securities “I’m a little bit cautious, but I remain positive going into the end of the year.”

Inflation rose slightly in the latest GDP report, coming in at an annual rate of 3.2 percent, up from 2.7 percent in the first quarter of the year. As with consumer spending, Wall Street remains concerned that high oil prices could spark inflation if businesses are forced to pass their energy costs on to their customers.

Rough weather and unrest in the world’s oil-producing regions sent crude climbing in recent weeks, but prices declined Wednesday after a Nigerian militia leader agreed to a tentative deal with the country’s president to end the fighting over its southern oil fields. Light, sweet crude for November delivery settled down 39 cents at $49.51 on the New York Mercantile Exchange.

In an attempt to tap into Russia’s vast oil reserves, U.S. oil giant ConocoPhillips took a $1.99 billion, 7.6 percent stake in Lukoil, the world’s second-largest oil company in terms of reserves. ConocoPhillips fell $1.64 to $81.57.

Orbitz surged 31 percent, or $6.40, to $27.17 after media reports said the company could be purchased by travel, hotel and real estate conglomerate Cendant Corp. for $26 to $28 per share, pricing Orbitz at more than $1 billion. Cendant fell 9 cents to $21.93.

Aerospace manufacturer Boeing Co. dropped $1.31 to $51.01 after Bank of America downgraded the stock to “neutral” from “buy,” citing potential weakness in the international aircraft market.

Telecommunications equipment maker Agere Systems Inc. declined 8 cents to $1.06 after saying it would lay off 500 employees in an attempt to offset declining revenues.

Spice producer McCormick & Co. slid 82 cents to $33.14 after it posted a 4.1 percent drop in third-quarter profits despite rising sales. The company nonetheless managed to surpass Wall Street forecasts by a penny per share.

Advancing issues outnumbered decliners by about 5 to 4 on the New York Stock Exchange. Preliminary consolidated volume came to 1.75 billion shares, compared to 1.80 billion traded Tuesday.

The Russell 2000 index of smaller companies closed up 5.41, or 1 percent, at 571.07.

Overseas, Japan’s Nikkei stock average fell 0.3 percent. In Europe, France’s CAC-40 closed up 0.4 percent, Britain’s FTSE 100 gained 0.5 percent and Germany’s DAX index climbed 1 percent.

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


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