Thursday: Greenspan? Huh? Bears?
Egg nog for all!
Stocks posted rich gains as traders popped the corks and partied.
All the major indexes rose. The
Dow Jones Industrials Average
soared 126.87 points to 6,473.64, as the Dow recorded its second-largest rise in terms of points ever. In percentage terms, the 2% move did not register in the top 100 moves.
The broader
S&P 500
was up 14.23 at 745.77 and the
Nasdaq Composite
jumped 10.50 to 1295.88. The
Russell 2000
, which measures small cap stocks, rose 3.02 to 356.10.
The big leap forward kept traders busy. A whopping 526 million shares changed hands on the
New York Stock Exchange
. Traders shuffled 661 million shares on the
Nasdaq Stock Market
.
And even if tomorrow's triple-witching--the simultaneous expiration of index futures, index options and individual share options--creates some volatility, optimism is returning to the recently shaken market.
James Griffin
, investment strategist at
Aeltus Investment Management
, thinks stock prices could jump 15% over the next 12 months. "Greenspan's comments injected some caution and that's healthy," Griffin said. "It speaks to the perpetuation of the bull market."
Grinch Fed chair
Alan Greenspan
shook the market two weeks ago by making rhetorical comments about stock-market "exuberance."
Surging bond prices also helped propel stocks higher yesterday. Evidence of a slowing economy helped the world's biggest debtor, Uncle Sam, borrow $12.5 billion without sending interest rates higher. The yield on the 30-year bond fell to 6.6% after revised jobless claims and a widening trade deficit suggested the American economy was finally shifting into lower gear.
Those low rates help stocks by keeping down corporate borrowing costs. They also make the returns in stocks relatively more attractive than bond yields.
The excitement of the rally swept through almost all sectors.
General Electric
(GE:NYSE) rose 2 to 101 1/4 after the appliance maker raised its quarterly dividend to 52 cents from 46. It was the 21st consecutive year GE raised dividends. GE, which owns
NBC
, also said it would buy back $13 billion in shares, more than the original $9 billion.
Other big names posting big gains:
Merck & Co.
(MRK:NYSE) rose 2 1/8 to 79 after it announced plans to form the world's largest animal medicine venture.
Nike
(NKE:NYSE) took it to the hole, rising 1 3/4 to 60 3/4 after
Robertson, Stephens & Co.
raised its earnings estimate to $2.80 per share from $2.26.
Procter & Gamble
(PG:NYSE) jumped 1 to 105 1/8; and
Coca-Cola
(KO:NYSE) leapt 2 3/4 to 51 1/8.
Wall Street applauded shareholders' decision to merge
Silver King Communications
(SKTV:Nasdaq),
Home Shopping Network
(HSN:NYSE) and
Savoy Pictures Entertainment
(SPEI:Nasdaq) into one company.
SKTV saw the biggest gain, rising 1 3/4 to close at 23 1/4. HSN, after an early day rally, finished the day up 5/8 to close at 10 1/2. Shares of SPEI closed at 3 1/8, up modestly.
Unfortunately, not everyone was invited to the party.
LCI International
, which appointed
NBA
legend
Julius Erving
to its board of directors last week, slid 3 7/8 to 21 7/8. The slip was attributed to a vaguely worded press release that suggested earnings growth might be disappointing. And the world's largest auto maker,
General Motors
(GM:NYSE), gave up 1/8 to 54 3/8 after it said marketing costs would be higher than expected.
By Andrew Morse