132-Point Gain Puts Dow at 3-Month High
Blue-chip stocks rose to their highest level in three months Thursday, with the Dow moving within 100 points of 9,000 in a rally that keeps finding new life.
The Dow Jones industrial average erased a 68-point deficit and rose 132.33 points to 8,915.47. The rebound left the Dow at its top mark since July 30 and about 400 points from the record of 9,337.97 set July 17.
Bond prices fell for the fourth time in five days after comments by Federal Reserve Board Chairman Alan Greenspan damped demand for Treasuries--just as the government sold $10 billion of bonds.
In a speech televised to the annual meeting of the Securities Industry Assn. in Boca Raton, Fla., Greenspan said the “episode of investor fright”--which sent bond yields to 31-year lows as investors snapped up the world’s safest securities and prompted the Fed’s two interest rate cuts since Sept. 29--could dissipate.
“Dollars to doughnuts, the Fed does not lower interest rates Nov. 17,” when its policymakers next meet, said Jack Ablin, who manages $270 million at Colonial Asset Management in Jacksonville, Fla.
The benchmark 30-year bond yield rose to 5.35% from 5.33% on Wednesday. Yields on two-year notes, the most active Treasuries, rose 0.03 percentage point to 4.48%.
Like the Dow, broader stock measures shook off a brief bout of profit-taking, extending the nearly continuous rally that began a month ago.
The Dow has now recovered nearly 1,500 points since it slid below 7,500 on Oct. 8, and it holds a gain of almost exactly 1,000 points, or 12.7%, for the year. Defying predictions of an impending setback--or at least a breather--the Dow has gone seven consecutive sessions without a loss, gaining 550 points, and hasn’t suffered a 100-point drop in more than a month.
“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. “But people are stumbling over themselves to get ahold of stocks.”
The Standard & Poor’s 500-stock index rose 15.18 points to 1,133.85, and the technology-heavy Nasdaq composite index rose 13.53 points to 1,837.10. The Russell 2,000 index of smaller companies rose 3.83 to 396.79.
Advancing issues outnumbered decliners by a 3-2 margin on the New York Stock Exchange, where volume totaled 770.21 million shares.
Among Thursday’s highlights:
* Some of the Dow’s most popular names led the advance. Merck rose $3.63 to $141.94, AT&T; rose $2.06 to $62.25, Procter & Gamble rose $2.19 to $89.31 and General Electric rose $2.06 to $90.81.
* Rexall Sundown plunged $8.94, or 41%, to $13.06 after the maker of vitamin and nutritional supplements said its fiscal first-quarter earnings won’t meet expectations.
* Cisco Systems rose $2.25 to $67.81 to lead the Nasdaq advance after reporting a strong profit late Wednesday.
* Charles Schwab soared $4.63, or 8.6%, to a record $58.38 on expectations that stocks’ autumn surge will boost earnings at the largest U.S. discount and online broker.
* Geron shares 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.
Overseas, Japan’s Nikkei stock average fell 1.3%, Germany’s DAX index fell 0.6%, Britain’s FTSE-100 fell 2.5% and France’s CAC-40 fell 2.4%.
Market Roundup, C5
