Dow Soars 212; Broad Market Also Advances
Stock prices blasted upward Monday, pushing the Dow Jones industrials to within 91 points of a record high, amid fresh optimism about interest rates staying low and takeover activity staying high.
But trading volume was weak by recent standards, which suggests investors’ conviction is suspect, some analysts said.
Still, the rally that pushed the Dow up 212.73 points, or 2.3%, to 9,552.68 was spread across many sectors, a positive sign.
In the broad market, winners topped losers by a margin of nearly 2 to 1 on the New York Stock Exchange and by a less impressive 21 to 18 on Nasdaq.
The Nasdaq composite index gained 58.41 points, or 2.6%, to 2,342.01 amid a renewed interest in Internet and other technology shares.
Some analysts said investors returned from the weekend in a buying mood as bond yields pulled back ahead of Federal Reserve Chairman Alan Greenspan’s testimony before Congress this week on the economy. That testimony begins today and continues Wednesday.
After rising in the morning, bond yields fell Monday afternoon, with the bellwether 30-year Treasury bond yield ending at 5.36%, down from 5.38% on Friday.
That suggests bond investors believe Greenspan won’t drop any hints this week that the Fed is positioning itself to tighten credit, amid robust U.S. economic growth, some analysts said.
In addition, Japanese bond yields continued to slide, falling to their lowest level since Jan. 26. The pullback in Japanese yields is making U.S. bonds look all the more attractive to Japanese investors, experts said.
On Wall Street, the mood was helped by a new round of takeover deals, including United Technologies’ $4.3-billion deal for Sundstrand.
“Mergers and acquisitions are part of today’s action, as people think there will be more to come,” said Timothy Ghriskey, senior portfolio manager at Dreyfus Corp., which manages $120 billion.
But by the closing bell, just 718 million shares had changed hands on the NYSE. Volume has slumped in recent weeks as the market overall has struggled, with blue chips trading sideways while small stocks have tumbled anew.
Indeed, even with its 1.4% gain on Monday, the Russell 2,000 small-stock index is down 5.7% year-to-date. By contrast, the Dow is up 4%.
The Dow’s point rise Monday was its biggest in five weeks. It left the index just 1% shy of its record closing high of 9,643.32 reached Jan. 8.
Among Monday’s highlights:
* The Dow was boosted by American Express, up $5.31 to $108.50; GE, up $3.63 to $104; and Wal-Mart, up $3.50 to $88.25.
Also in the Dow, IBM surged $6.31 to $177.94 and Hewlett-Packard shot up $5.56 to $73.88, leading the rebound in tech stocks.
* Among other tech names, Sun Microsystems surged $7.88 to $104.31, Intel rose $4.75 to $132.81 and Cisco Systems was up $4.94 to $102.06.
* In the Internet sector, EBay leaped $39.25 to $278.75, America Online shot up $12.63 to $173 and Network Solutions rocketed $19.88 to $160.63.
Also, E-Trade led online brokerage shares higher again, soaring $8.44 to $48.56, amid talk that the firm may be considering a closer relationship with investment banker Goldman Sachs. E-Trade rival Ameritrade zoomed $18.25 to $104.25.
* Other winning sectors included retailers, with Abercrombie & Fitch surging $8.69 to $79.75 and Dayton Hudson up $2.19 to $63.38.
* Airline, banking, telephone and casino stocks also were winners overall.
* H&R; Block rose $3.38 to $44.50 as the tax and financial services company talks with national accounting and consulting firm McGladrey & Pullen about a possible business combination.
Market Roundup, C12
