Stocks Extend Rally; Gold Price Tumbles
U.S. stocks padded their gains Tuesday as the bulls remained in charge on Wall Street.
Meanwhile, the bond market was calm as the Federal Reserve Board met to mull interest rates. Gold prices dove even as silver surged.
The Dow Jones industrial average rose 52.57 points to 8,160.35, as blue-chip shares mounted a late rally to complement Monday’s stunning 201.28-point surge.
In the broad market, winners topped losers by 17 to 12 on the New York Stock Exchange and by 22 to 19 on Nasdaq, and most key indexes rose with the Dow.
The Standard & Poor’s 500 set its second consecutive record high, adding 4.72 points to 1,005.99.
The Nasdaq composite gained 13.45 points to 1,666.34 after soaring 33.53 points on Monday.
The Dow opened with a 50-point loss as investors secured some gains from Monday’s rally, which had been triggered in part by dramatic gains in beaten-down Asian stock markets Monday.
On Tuesday, however, Asian markets turned mixed as some investors sold into Monday’s rally. And at midday today, most Asian markets were modestly lower. Hong Kong’s main index, up 14.3% on Monday, slipped 0.5% on Tuesday and at midday today was off 0.6% at 10,458.
Indonesia’s stock market was off 2.7% at midday today.
Wall Street’s early weakness Tuesday didn’t last. Buyers continued to push cash into technology and banking stocks, among other sectors, as the day wore on, lifting the broad market.
The Dow ended at its highest level since Oct. 7, and now is just 1.2% from its all-time high of 8,259.31, reached Aug. 6.
The Nasdaq composite index is 4.6% below its peak set in October.
“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. Tuesday’s action “certainly suggests that we’re breaking out of a trading range we’ve been in since August.”
Meanwhile, bond yields were slightly lower, with the 30-year Treasury bond yield easing to 5.86% from 5.87% on Monday.
Two economic reports Tuesday suggested the economy is slowing. Even before those reports, key Federal Reserve officials have in recent weeks hinted that they have no intention of raising interest rates any time soon.
The Fed’s policymaking committee began a two-day meeting Tuesday. Most on Wall Street expects the central bank to leave rates alone for now.
In other trading, near-term gold futures slid $7.60 to $295.80 in New York on growing concern that South Korea will sell gold to help pay its foreign debts.
Gold’s continued woes are in sharp contrast to silver’s surging price. Billionaire investor Warren Buffett late Tuesday revealed that he has been accumulating silver.
Among Tuesday’s highlights:
* Banking shares that rose sharply included J.P. Morgan, up $3.94 to $108.88; Wells Fargo, up $4.13 to $321.63; BankBoston, up $3.63 to $95.25; and Bankers Trust, up $3.88 to $110.88.
* Big-name tech stocks leading that sector higher included Microsoft, up $1 to a record $155.88; Intel, up $3.25 to $86.31; Compaq, up $2.56 to $33; and Micron Technology, up $2.56 to $37.81. But IBM lost $1.19 to $99.38, and Newbridge Networks plunged $5.50 to $20 after the telephone equipment maker warned that it hasn’t been able to offset ebbing sales of older products with revenue from newer ones.
* PepsiCo slumped $1.31 to $35.19 despite reporting higher earnings. Analysts said the company showed a drop in U.S. beverage operating profits.
Market Roundup, D10
