Thank goodness for tedium.
It was the fuddy-duddy bond market that fueled Tuesday's roaring stock market. Bonds shot skyward this morning after the
Consumer Price Index
showed costs rising at a slower-than-expected pace. The CPI rose 0.2%, less than the 0.3% most economists had forecast. News of no inflation in Eden pushed the benchmark 30-year bond 2 1/4 points higher, guiding the yield to a six-week low of 6.4%.
Those lower interest rates, which improve the expected value of future earnings to investors, powered a stunning rise in the
Dow Jones Industrial Average
. The venerated measure made its fourth biggest single-day point rise, jumping 174.78, or 2.3%, to 7895.92. The broader market wasn't left out of the gooey good tidings. The
was up 25.87, or 2.8%, to 945.64.
"Good inflation numbers have called the tune on the tape," says Alan Ackerman, market strategist at
. "This is a market with plenty of bounce."
The good news (so good that
pulled out its "Stocks Surge" bug) was made even better as the market confirmed what many pundits had been noodling over the past week -- small caps are now part of this spectacular bull market. The
, which measures the progress of Corporate America Jr., surged 5.01, or 1.1%, to 445.18.
"Many of the smaller companies are beginning to benefit from the economic scenario we're living through," says Ackerman.
Most impressive: Stocks nailed by yesterday's
disaster posted pleasant bounces. Microsoft was up 5 13/16, or 4.5%, to 136 3/8; computer-maker
jumped 4 7/8, or 5.6%, to 92 3/8; chipmaker
rose 3 13/16, or 4.1% to 95 13/16.
rallied 5 3/16, or 8.1%, to 69 1/2 after
upgraded the computer maker to outperform from neutral.
In the "Thanks for Nothing" Department:
named Steve Jobs as interim chairman of the company he helped found. The news boosted the beleaguered computer maker 7/16, or 2%, to 21 15/16.
rose 3 3/8, or 3.5%, to 99 5/8; while
, which reported earnings after the bell, jumped 1 1/2 or 4%, to 39 9/16.
The networkers finally lifted themselves up from recent woes amid speculation maligned
preannounce poor third-quarter profits when its CEO speaks at a conference in Boston tonight. Ascend rose 1 1/8, or 3.3%, to 33 11/16;
jumped 4 7/8, or 7%, to 74 1/2; and
added 2 11/16, or 6.3%, 38 9/16.
Banking shares, always interest-rate sensitive, also turned in a solid showing.
rose 3 15/16, or 3.1%, to 131 7/16;
leapt 3 1/16, or 2.7%, to 115 9/16;
, up 4 3/8, or 1.7%, to 261 3/4;
, up 2 1/16, or 2.9%, to 74 5/16; and
, up 3 1/4, or 4.8%, to 70 3/4%.
jumped 1 7/8, or 4.6%, 42 7/8 after
upgraded the industrial components maker to near- and long-term buy and placed the company on its focus list. Merrill's John Roberts gave the company a 12-month target of $65.
rose 1 1/8, or 4.1%, to 28 11/16 after
BT Alex. Brown
started coverage of the wireless phone company with a strong buy.
, which announced it was one of the biggest beneficiaries of the
strike, jumped 4 1/2, or 6.3%, to 75 3/4 -- an all-time high. The company reported first-quarter earnings jumped to $1.22 per share versus 54 cents a share last year.
Midday Musings, slid 2 7/8, or 4.8%, to 57 1/8 after it warned third quarter earnings would likely miss the mark because a strong dollar would erode the repatriated value of its overseas earnings.
In more warnings news,
cautioned that third-quarter earnings could get hit on the same foreign currency concerns. Third-quarter earnings, to be unveiled in October, will likely miss the 87 cents a share figure, forecast by
. Polaroid dropped 3 5/16, or 6%, to 52.
continued sliding. It fell 9/16, or 1.2%, to 46 15/16 after it agreed to pay $96 million, or 35 cents per share against third-quarter earnings, to settle a dispute with
Johnson & Johnson
over its red-blood-cell booster Epogen, used in dialysis.