US stocks advanced on Monday, bouncing back from an early dip as Hurricane Katrina weakened after making landfall and crude prices retreated from a record high above $70 a barrel set overnight.
Shares of home-improvement retailers rose on expectations that demand for building materials would rise in the storm's wake. Home Depot Inc, the No 1 home improvement retailer, rose 1.9 percent to $40.57 while No 2 Lowe's Cos. Inc advanced 1.3 percent to $63.99 on the New York Stock Exchange.
Oil companies also rose as Katrina was feared to have damaged offshore oil platforms in the Gulf of Mexico, a key US oil-producing region.
ConocoPhillips rose 2 percent to $63.13 and oil-field services company Halliburton Co gained 2 percent to $58.42 on the NYSE.
The Dow Jones industrial average was up 20.31 points, or 0.20 percent, at 10,417.60. The Standard & Poor's 500 Index was up 1.45 points, or 0.12 percent, at 1,206.55. The technology-laced Nasdaq Composite Index was up 4.00 points, or 0.19 percent, at 2,124.77.
Oil futures surged $2.17 to $68.30 a barrel on the New York Mercantile Exchange. But that was well below an earlier all-time high of $70.80. Oil's rise raised fears that energy costs could drive up corporate expenses and eat into consumer discretionary spending.
"I'm a little surprised the oil prices haven't hurt the market more," said Giri Cherukuri, head trader at OakBrook Investments LLC, of Lisle, Illinois.
The US National Hurricane Center downgraded Hurricane Katrina to a Category 3 storm, the midpoint of a five-step scale.
Katrina's centre was 30 miles (48 km) south-south-east of New Orleans Monday morning.
Katrina may the most expensive hurricane ever to hit the United States, costing insurers as much as $25 billion, a storm modeller said. Shares of insurance companies fell, including St. Paul Travellers Co, which slid 38 cents to $44.36, and Allstate Corp, which dropped 1.4 percent to $57.18.
Shares of gaming companies with operations in storm-affected regions were lower. Isle of Capri Casinos, which operates riverboat casinos, were off 3 percent to $23.46 on the Nasdaq.
The biggest boosts to the Nasdaq came from chipmaker Intel Corp and auction Web site eBay Inc Intel shares rose 1 percent to $25.66 and eBay gained 23 cents to $39.20.