Dow Climbs Above 8,000 as Tech Shares Lead the Rebound
Wall Street rallied for a second consecutive session Monday, as a holiday in the bond market allowed investors to focus on some favorable corporate earnings reports.
Also, powerful gains in most foreign markets helped set a positive tone for U.S. stocks--just days after the Dow Jones industrials were threatening to test their summer lows.
The Dow closed up 101.95 points, or 1.3%, at 8,001.47 on Monday, building on Friday’s 168-point advance.
The broader market also was strong, led by tech issues, although prices retreated from their highs by the close. The Dow was up as much as 185 points before fading.
Asian markets set the pace for Wall Street, as most continued to soar in the wake of the Japanese yen’s surge against the dollar last week.
The stronger yen, rooted in optimism over Japan’s efforts to revive its economy and save its banking system, has been bolstered by hedge funds that had borrowed in yen and now are rushing to close out those loans as the currency moves against them.
The dollar has fallen from 135.65 yen on Oct. 2 to 117.63 on Monday in New York. That was up a modest 0.68 yen from Friday.
The yen’s strength takes devaluation pressure off smaller Asian countries and also makes them more competitive against Japan in export markets.
That has helped spark a major rally in beleaguered Asian stock markets. The Hong Kong market jumped 5.7% on Monday as receding currency concerns allowed local interest rates to fall. The market has surged 24% since Sept. 21.
Singapore’s market jumped 4.1% on Monday. The South Korean market rose 4% and is up 19% since Sept. 21.
Also, China’s currency, the yuan, hit a record closing high against the dollar Monday. The yuan finished at 8.2774 to the dollar on the Shanghai Foreign Exchange Trade System, eclipsing the former peak close of 8.2777 on Friday.
China said late Friday that foreign exchange reserves had reached $141 billion at the end of September, up $1.2 billion from the end of last year.
The Tokyo market, meanwhile, zoomed 5.2% to 13,555 on Monday, after tumbling to a 13-year low on Friday as export shares were dumped on worries about the yen.
In Europe on Monday, stocks also soared, with the German market posting one of its biggest advances ever. The DAX index rocketed 6.1% to 4,225.49. The French market jumped 5.5% and the Swedish market leaped 11.7%.
On Wall Street, worries about last week’s sudden jump in long-term Treasury bond yields--blamed on hedge fund trading and on bond sales by some Japanese investors--were put aside, with the bond market closed for the Columbus Day holiday.
That gave the upper hand to stock bargain hunters, after last week’s heavy losses.
“The market was significantly oversold late last week. Sentiment on common stocks was so low that you couldn’t get much more bearish,” said John Shaughnessy, chief investment strategist for Advest Inc. in Hartford, Conn.
Tech stocks led the charge Monday. The tech-heavy Nasdaq composite index, down 7.6% last week, rose 3.6% to 1,546.08.
Winners topped losers by about 2 to 1 on the New York Stock Exchange and on Nasdaq, though in subdued trading.
The early trickle of third-quarter financial results remained fairly encouraging Monday, with a strong showing from Chrysler, which rose $2.50 to close at $44.25.
Among Monday’s highlights:
* Tech leaders included Microsoft, up $2.88 to $99.75; Dell Computer, up $3.25 to $56.06; Cisco Systems, up $2.31 to $52.38; and IBM, up $3.56 to $130.88.
Among smaller names, Broadcom soared $9.13 to $71.25 on a strong earnings report. Among Internet issues, Yahoo zoomed $8.81 to $114.44.
* Many industrial shares rallied, including Georgia-Pacific, up $3 to $52.63; Emerson Electric, up $2.50 to $63.69; and United Technologies, up $2.38 to $79.13.
Also, Boeing rose $1.13 to $33.13 after it won a 10-year, $1.2-billion contract to upgrade systems in U.S. Air Force transport planes.
* Financial stocks were mixed. J.P. Morgan fell $2.38 to $82.25 and Washington Mutual rose $1.69 to $33.56.
Market Roundup, C14
