132-Point Gain Puts Dow at 3-Month High
Another strong rally lifted stocks across the board on Thursday, pushing the Dow Jones industrial average to within 100 points of the 9,000 mark.
Wall Street again virtually ignored rising Treasury bond yields, instead taking heart from the continued easing of the panic that had gripped markets worldwide just one month ago.
The Dow Jones industrial average shot up in late trading to close with a gain of 132.33 points, or 1.5%, at 8,915.47.
The Nasdaq composite index rose 0.7% and the Russell 2,000 small-stock index was up 1%. Winners topped losers by 18 to 12 on the New York Stock Exchange.
Federal Reserve Board Chairman Alan Greenspan helped snap the market out of early losses by telling a Securities Industry Assn. meeting in Boca Raton, Fla., that he is already seeing signs that “the current episode of investor fright will dissipate.”
That kind of talk is giving more investors confidence that the U.S. economy will avoid recession in 1999. Just as important, Greenspan seemed to signal that the Fed stands ready to support the economy with lower interest rates, if needed.
But some analysts came away with the opposite view. “Reading between the lines” in Greenspan’s remarks, “it’s less likely we will see a rate decrease in the near term,” said Timothy Ghriskey, a portfolio manager at Dreyfus Corp.
The Fed, which has cut short-term interest rates twice since Sept. 29, meets again Nov. 17.
The bond market, which rallied initially Thursday after the unplanned release of October employment data, sold off later in the day, pushing yields higher.
The Treasury sold $10 billion of new 30-year bonds at a yield of 5.30%, slightly above expectations. By the end of the day the 30-year bond yield was 5.35% in the market, up from 5.33% on Wednesday.
“There weren’t a lot of bidders,” said Joe LaVorgna, economist at Deutsche Bank Securities.
The yield on one-year T-bills rose to 4.53% from 4.48%. It was at 4.06% as recently as Oct. 28.
Analysts say the rebound in yields in part reflects that some investors are cashing out of Treasuries in favor of making riskier bets in stocks, as the market continues to resurge.
The Dow, up nearly 17% since Oct. 1, now must rise just 4.8% to breach its record high of 9,337.97 set on July 17.
The Dow has risen in 14 of the last 19 sessions.
“It is a little surprising, after this steep of a decline and with the global economy still technically in crisis, how the market can’t seem to pull back much at all,” said Dan Ascani, research director at Global Market Strategists in Gainesville, Ga. The longer this rally persists without interruption, he cautioned, the greater the risk.
“This [rebound] has been nearly vertical, and to us that’s not as healthy as backing and filling, because then the market will see a sharper correction than otherwise necessary,” Ascani said.
Among Thursday’s highlights:
* Financial stocks continued to lead the market, with J.P. Morgan up $2.25 to $104, BankAmerica up $2.38 to $62.75 and Charles Schwab up $4.63 to a record $58.38.
* Leading blue chips included Merck, up $3.63 to a record $141.94; AT&T;, up $2.06 to $62.25; and GE, up $2.06 to $90.81.
* Airlines, sensitive to the economy’s outlook, were strong, with Southwest up $1.56 to $23.13 and Delta up $2.75 to $108.75.
* Among smaller stocks, Geron soared $2.31, or 30%, to $9.88, just hours before the release of promising research funded by the company. Researchers said they had for the first time isolated and cultured a special type of human cell that serves as the building block for all others.
* On the downside, Rexall Sundown plunged $8.94, or 41%, to $13.06 after the maker of nutritional supplements said fiscal first-quarter earnings won’t meet expectations because of slower sales.
Also, Polo Ralph Lauren dove $3.75 to $20.13 after reporting disappointing earnings.
Market Roundup, C5
