Financial, Telecom Stocks Lead Market Rally
Stocks rebounded sharply Monday, led by financial, airline and telecommunications issues, as investors bet that the Federal Reserve will leave interest rates alone when policymakers meet today.
Meanwhile, gold rocketed anew, with near-term futures soaring $12.70 to $316.40 an ounce. But oil prices tumbled 78 cents to $23.76 a barrel in New York on speculation that higher output by Norway next year will counteract production cutbacks.
On Wall Street, the Dow Jones industrials ended up 128.23 points, or 1.3%, at 10,401.23. The market surged at the opening and held its gains all day.
The Nasdaq composite soared 2.2% and the Russell 2,000 small-stock index added 0.7%.
“With the pounding the market took in early- and late-September, it got pretty oversold, so it was set up for a reflex bounce or a short-term rally,” said Richard McCabe, analyst at Merrill Lynch. Going into the week, the Dow had fallen more than 9% since August.
Stocks were helped as bond yields pulled back Monday. Wall Street is virtually convinced the Fed will make no change in its benchmark short-term rate today, after two increases in summer, to 5.25%.
“Nobody feels the Fed will actually pull the trigger,” said Deborah Cunningham, who manages money-market funds at Federated Investors in Pittsburgh.
The yield on the 30-year Treasury bond eased to 6.09% from 6.13% Friday. Bonds also were helped as the dollar rallied, reaching 106.23 yen, after tumbling on Friday.
Commodity markets sent mixed signals. After surging, then pulling back, last week, gold leaped again to a two-year high as buying by “short sellers” who were caught off-guard by the price surge further tightened available supplies.
But oil prices slid after Norway estimated that its oil output would rise by about 18% in 2000. The country’s oil minister ended a meeting with her Mexican counterpart today without saying Norway would keep output restrained through March, as other producers plan.
In the stock market the advance was fairly broad on the New York Stock Exchange, with winners topping losers by 3 to 2. But trading volume was weak compared with recent sessions when prices fell.
Among Monday’s highlights:
* Bank and brokerage stocks, beaten down this year, soared on hopes interest rates may stabilize. Merrill Lynch zoomed $2.94 to $68.81, Bank of America gained $2.06 to $57.38, Washington Mutual jumped $1.56 to $30.38 and American Express surged $6.19 to $137.56.
* Major tech stocks, market leaders this year, were hot again. Intel rose $2.06 to $77, Sun Microsystems jumped $4.53 to $96.53, Apple added $2.84 to $64.56 and Micron Technology gained $4.88 to $76.38.
But the Internet sector was mixed. Homestore.com gained $2.69 to $44.63 and Inktomi rose $1.63 to $115.06, but Yahoo fell $4.25 to $171.19.
* Telecom issues gained after BellSouth joined a bidding war with MCI WorldCom for Sprint. Sprint rose $3.88 to $60.88, and MCI added $1.13 to $71.63. BellSouth slid $2.69 to $42.69.
Also, JDS Uniphase soared $9.75 to $125 after the maker of parts for fiber-optic equipment in phone networks said it will buy another equipment maker, Epitaxx, for $400 million in stock.
Radio stocks rose after Clear Channel said it is buying AMFM for $16.7 billion. AMFM rose $1.31 to $65.19, though Clear Channel fell $3.88 to $76.50.
* Falling oil prices were bad for energy stocks. Chevron fell $2.19 to $86 and Noble Affiliates slid $1.94 to $27.19.
But airline stocks gained on hopes for lower fuel prices and on news that September traffic picked up.
AMR, parent of American Airlines, soared $5.38 to $59.25. Alaska Airlines surged $3.06 to $43.44.
* Several major retailers, including Wal-Mart, up $2 to $50.31, gained amid hopes for strong monthly sales reports due out later this week. But 99 Cents Stores plunged $4.44 to $28.63 ahead of its sales report due early today.
* Among new issues, TiVo continued to rise, gaining $9.56 to $46.56 on optimism for the company’s TV recorder service that lets viewers pause, rewind and play back live broadcasts.
Market Roundup, C10
