Stocks Advance as Brazil Fears Ease; Dow Up 123
U.S. stocks rallied sharply Thursday as concerns about Brazil’s teetering economy eased and as more investors sought to get aboard the market’s rebound.
Bond yields were mixed, while the dollar lost ground.
The Dow Jones industrial average surged 123.06 points, or 1.5%, to 8,495.03.
In the broader market, advances led declines by 19 to 12 in active turnover of 699 million shares on the New York Stock Exchange.
The Nasdaq composite index rose 19.84 points, or 1.1%, to 1,757.19. The Russell 2,000 index of smaller stocks gained 0.8%.
“Portfolio mangers have cash built up, and there is nothing more disquieting than having cash in a rising market, because you don’t want to be left out,” said Hugh Johnson, analyst at First Albany. “There is a growing sense of urgency to get that cash to work.”
The average stock mutual fund had 6.2% of assets in cash at Sept. 30, up from 5.1% at July 30, the funds’ chief trade group said Thursday.
Helping investor sentiment: Brazil on Wednesday detailed an austerity plan aimed at staving off a devaluation of the country’s currency. Brazil’s plan is viewed as a “line in the sand” for the global financial crisis: If it works, fears of another round of worldwide devaluations may be washed away.
Still, the Brazilian stock market fell 4.2% Thursday, though other Latin American markets moved up. Mexico’s market gained 1.7%.
On the NYSE trading briefly came to a virtual halt as the space shuttle Discovery lifted off from the Kennedy Space Center shortly after 2 p.m. EST. Traders gathered around TV screens on the floor to watch the event that would make Sen. John Glenn, 77, the oldest person to visit outer space. At liftoff, they cheered.
Meanwhile, the latest round of U.S. economic numbers reminded Wall Street that inflation remains a threat. The Employment Cost Index--a broad gauge of worker compensation that the Federal Reserve Board watches closely for signs of inflation--rose 1% in the third quarter after a 0.9% rise for the April-June period.
Shorter-term Treasury yields rose on the news, with the 3-month T-bill yield at 4.32%, up from 4.25% Wednesday. But the 30-year T-bond yield slipped to 5.08% from 5.12%.
Among Thursday’s highlights:
* HMO stocks rocketed in the aftermath of some decent earnings reports. Humana gained $1.75 to $18.13, and WellPoint Health jumped $9.69 to $71.94.
* Drug stocks also were strong, with Merck--which reported a 14% increase in quarterly profit earlier this month--rising $3.94 to $135.94, Pfizer up $2.06 to $107.75 and Amgen up $2.13 to $79.38.
* Tech stocks continued to lead the market, with Micron Technology up $4.25 to $39.94, IBM up $2.56 to $148.75, Sun Microsystems up $2.06 to $58.75 and Parametric Technology gaining $2.50 to $18.13.
In the Internet sector, Amazon.com surged $9.44 to $126.50 after reporting a strong quarterly sales gain on Wednesday.
* Merrill Lynch jumped $4.44 to $56.56, as financial stocks gained. The stock tumbled 65% from July 13 through Oct. 7 as Russia’s debt default and currency devaluation cost securities firms hundreds of millions of dollars.
“The market is looking past all the brokers’ problems,” said Steve Eisman, a CIBC Oppenheimer analyst. “It’s saying, ‘The Federal Reserve is on the case’ ” by lowering interest rates.
Market Roundup, C8
