Stocks Extend Rally; Dow Up 52; Silver Prices Soar
Stocks rose modestly Tuesday, wiping out the damage remaining from October’s sell-off and pushing the Dow Jones industrial average to within 100 points of its all-time record. Bond yields fell.
The Dow opened with a 50-point loss as investors secured some gains from Monday’s rally, which saw the 30-stock index close 201.28 points higher. By the end of Tuesday’s session, the Dow had overcome that setback to finish at 8,160.35, up 52.57 points. The blue-chip barometer, which peaked on Aug. 6 at 8,259.31, hasn’t finished a session at this level since Oct. 7, before a financial panic in Asia led to a record 554-point plunge in the Dow on Oct. 27.
Meanwhile, silver prices soared to nine-year highs as supplies dwindled to levels not seen in more than a decade.
The dollar dropped against major currencies.
In the broader stock market, other indexes also shrugged off some early profit-taking on Tuesday. The Standard & Poor’s 500 and the New York Stock Exchange composite indexes advanced farther into record territory, with the S&P; rising 4.72 points, or 0.47%, to 1,005.99, and the NYSE composite rising 2.28 points to 523. The technology-heavy Nasdaq composite index rose 13.45 points to close at 1,666.34.
Trading volume was again extremely heavy. More than 700 million shares changed hands on the NYSE.
“The fear has turned from one of being in the market to being out of the market, because the fundamentals seem to be intact, despite the three crises: Asia, Clinton and Iraq,” said Tony Dwyer, chief equity strategist at Ladenburg Thalmann. “Today’s action certainly suggests that we’re breaking out of a trading range we’ve been in since August.”
The gains came as the Federal Reserve Board’s policy-making committee began a two-day meeting to consider interest-rate policy. Most on Wall Street expect the central bank to leave interest rates alone.
The Commerce Department reported Tuesday that sales of new single-family homes unexpectedly fell 9.3% in December, and a private research group reported that its barometer of future economic activity was unchanged in December, ending a five-month string of gains.
The latest rise in U.S. stocks was ignited by a rally in Asian markets Monday. Most markets in Asia cooled in overnight trading Tuesday, but it appears U.S. investors are convinced the turbulence overseas has calmed for now, analysts said.
The yield on the bellwether 30-year U.S. Treasury bond edged lower, to 5.86% from 5.87% on Monday.
Among Tuesday’s highlights:
* Leading the Dow were J.P. Morgan, up $3.94 to $108.88; Union Carbide, up $2.06 to $47; and Procter & Gamble, up $1.81 to $81.31.
* Among Nasdaq’s leaders were Intel, up $3.25 to $86.31; Dell Computer, up $1.50 to $106.06; and Microsoft, up $1 to $155.88.
In the bullion market, spot silver ended at $6.76 an ounce, the highest levels since July 1988. Silver fixed at $6.39 in London on Tuesday, the highest since November 1988.
The rise coincided with a statement by billionaire investor Warren Buffett, who said his Berkshire Hathaway Corp. has purchased 129.7 million ounces of silver in the last six months. That amount represents more than 20% of the world’s estimated silver supply at the end of 1997, according to CPM Group, a metals market consulting firm.
Market Roundup, D10
