Posted on May - 02 - 2011
Stocks surge, then flatline, on news of Osama Bin Laden’s death
The party didn’t last long.
Times Square and outside the White House weren’t the only streets where people celebrated the death of Osama Bin Laden yesterday.
Wall Street reacted to the killing of the world’s most wanted terrorist with a rise in stocks when Monday’s markets opened — and a temporary dip in oil prices, which have been rising steadily due to the unrest in Libya and the Middle East.
But the stock surge fizzled and oil rose again by the afternoon, as investors’ euphoria over U.S. forces taking out Bin Laden gave way to caution.
Many Wall Street analysts said there would likely only be a short-term gain for the market as investors focus on earnings, economic news and the rising price of oil that has helped spur gas prices in the U.S. to more than $4 a gallon — not to mention the possibilty of retaliatory terror strikes by Bin Laden supporters.
“It’s not clear that Bin Laden���s death is going to change the ongoing events” in the troubled Middle East, Russ Koesterich, head of investment strategy for asset manager BlackRock, told Bloomberg News.
“We got a psychological lift, but it doesn’t change anything.”
Traders had other reasons to be optimistic, even if the rally didn’t last. U.S builders began work on more office buildings, hotels and factories in March, which raised construction spending after three straight months of declines, the Commerce Department said. Construction spending rose 1.4%, the biggest boost since April 2010.
Manufacturing also grew for the 21st straight month in April, while several companies, including Chrysler and drug maker Humana, reported strong quarterly earnings.
The Dow fell 3 points to close at 12,807, after being up as much as 65 points early in the day. Oil prices rose again, to more than $113 a barrel, after falling below $111 as news of Bin Laden’s death spread around the globe.
Traders are still uncertain if the death of the 9/11 mastermind will result in more stability in the Middle East and Libya, or if terrorist attacks could affect oil supplies.
With News Wire Services
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