Rally Heard Round the World
Securities markets rallied worldwide Friday, buoyed in part by a U.S. government employment report that eased fears of a further interest rate hike by the Federal Reserve.
On Wall Street, it was another day, another record for Nasdaq.
More remarkable was that Friday’s rally included a broader slice of the market than just the technology and Internet shares that have been powering Nasdaq in recent weeks.
Financial stocks and utilities--both sensitive to interest rates--joined the party, as did the bond market.
The Standard & Poor’s 500-stock index also set a record, while the Dow Jones industrial average briefly roared past its Aug. 25 high but faltered in the afternoon and fell short of a new closing mark.
The Dow gained 247.12 points, or 2.2%, to 11,286.18; Nasdaq rose 67.85 points, or 2%, to 3,520.63; and the S&P; climbed 24.26 points, or 1.7%, to 1,433.30.
Nasdaq is up 60.5% in 1999--more than triple the gain for the S&P; and on track for its best year yet.
In Europe, all the big stock markets gained, paced by a 3.1% surge in Germany’s DAX index. A 2.1% jump sent France’s CAC-40 to a record. Weakness in the euro, Europe’s common currency, has a positive flip side in that it may help the region’s exporters.
Brazilian and Mexican indexes posted records on expectations of strong economic growth throughout Latin America.
If there is an emotional state of equal parts euphoria and terror, that describes U.S. money managers, who are enjoying big gains in their portfolios but are afraid of an imminent market collapse.
“You have to be in [the market] because otherwise you’d be missing amazing gains,” said Christopher Low, economist at First Tennessee Securities. “But you’d better stay close to the exit.”
The green light for Friday’s rally flashed first thing in the morning with the release of the federal government’s monthly jobs report, showing an anemic 0.1% rise in hourly wages for November--even as the unemployment rate held steady at a 29-year low of 4.1%.
It was enough to satisfy Wall Street that the Fed won’t need to raise rates for the time being.
The Dow rose as much as 302 points in the morning, 20 points beyond its all-time record closing high of 11,326.04.
J.P. Morgan, American Express and Citigroup led the way among financials, but as usual lately, tech stocks stole the spotlight, even among the Dow industrials. Hewlett-Packard zipped $5.25 to $105 and IBM gained $6.88 to $111.88 on the New York Stock Exchange.
On Nasdaq, networking, software and communications issues ruled.
The bond market, meanwhile, had its best day in five weeks. The yield on the benchmark 30-year Treasury plunged to 6.26% from 6.31% on Thursday. It was a welcome break for bond investors after three weeks of rising yields.
Stock market investors have been faring far better lately. Nevertheless, technicians, who track such data as trading volume and “breadth”--the ratio of gaining stocks to losing ones--have been nervous about the market’s direction in recent days.
Breadth on both the NYSE and Nasdaq has been weakening even as the indexes have risen.
“The advance-decline line has been terrible,” said technical analyst Peter D. Green of Gruntal & Co. The line expresses the ratio of stocks going up to those going down.
But if Friday’s turnaround in the bond market can be sustained, Green said, financial stocks may move toward new highs and utility issues could also rally, which by itself would improve breadth.
Gregory Nie, technical analyst with First Union Securities in Chicago, said a positive force for the stock market between now and New Year’s Day is that money managers will feel “psychological pressure” to buy stocks to try to improve their performance numbers for the all-important annual report card.
For the week, the Dow advanced 2.7%, the S&P; 1.2% and Nasdaq 2.1%.
Among Friday’s highlights:
* In the financial sector, J.P. Morgan rose $4.13 to $136.63, Citigroup gained $3.19 to $57.19 and American Express climbed $3.81 to $157.25.
* Tech winners included Inktomi, up $17.69 to $145 after announcing a 2-for-1 split, effective Dec. 30 for holders of record Dec. 14; BEA Systems, up $18.81 to $115.50 after being named to the “recommended list” at Goldman Sachs; and McAfee.com, up $9.13 to $53.13 in its second day of trading after a $12-a-share offering.
* Time Warner Telecom vaulted $5.88 to $35.75 after being rated “top pick” at Donaldson Lufkin & Jenrette. Telecom fever sent Motorola up $5.44 to $124 and Qualcomm up $10.44 to $384.44.
Nokia’s U.S.-traded shares soared $17.38 to $162 after the world’s leading cell-phone maker said sales will rise as much as 40% next year. Ericsson’s U.S. shares climbed $3.44 to $55.
* Carmike Cinemas skidded $1.88 to $9.44 after the company warned of a fourth-quarter loss.
* Mirage Resorts rose $1.38 to $14.31 as the casino operator increased its stock-buyback plan and BancBoston Robertson Stephens upgraded the shares.
Market Roundup, C4
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Bulls Romp Globally
Investors have been rushing into stocks around the globe, as indexes in Europe and Latin America have powered to records along with the Standard & Poor’s 500 and Nasdaq. Weekly closes for the S&P; 500, France’s CAC-40 and Brazil’s Bovespa:
S&P; 500
Friday:
1,433.30
France’s CAC-40
Friday:
5,468.05
Brazil’s Bovespa
Friday:
14,408.71
