NEW YORK – Stocks rose Thursday after Hurricane Rita (search) was downgraded to a Category 4 storm, easing fears it would cause as much damage as Hurricane Katrina and disrupt oil production to the same extent.
The market had held in a tight range through the early part of the session, with investors hesitant to make big bets as Rita barreled toward the Texas coast and the heart of the U.S. oil refining business three weeks after Katrina hit the U.S. Gulf of Mexico region.
"The storm is drifting east and the further east of Houston it gets, the less damage it is going to do to refineries in the Houston area," said Tom Schrader, managing director at Legg Mason Wood Walker. "Crude futures are down as investors see the storm going in, in a less economically vulnerable area" and "that's what has got the market rallying."
The Dow Jones industrial average (search) was up 52 points, or 0.50 percent, at 10,429. The Standard & Poor's 500 Index (search) was up 4.62 points, or 0.38 percent, at 1,214.82. The technology-laced Nasdaq Composite Index (search) was up 4.75 points, or 0.23 percent, at 2,111.39.
Crude oil prices retreated after Rita's downgrade. NYMEX November futures fell 30 cents to settle at $66.50 a barrel after hitting a session high at $67.90 in morning trading.
Katrina, one of the nation's worst natural disasters, struck the U.S. Gulf Coast in late August, heavily damaging oil rigs and refineries and lifting crude prices to record highs.
Advancing stocks included McDonald's Corp. (MCD), a Dow component. McDonald's gained 4.7 percent to $32.90 on the New York Stock Exchange. The company said Wednesday it is planning an initial public offering of its popular Chipotle restaurant chain, but won't pursue a new structure for its real estate assets..
Shares of oil- and gas-related companies reversed earlier gains. The S&P oil & gas exploration and production index slipped 0.8 percent. Chevron Corp. (CVX) stock was down 0.7 percent at $63.82, while shares of rival energy company ConocoPhillips slid 1 percent to $69.74.