Today's Market: Stocks End Feeling Great; Dow, Nasdaq Both Post Triple-Digit Gains

<LI>Financials soar.</LI> <LI>Ford ends sharply lower.</LI>
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(

Updated from 4:08 p.m. EDT

)

Crazy Eddie is certainly back in

business, because this was Christmas

in August

.

The major indices put it all together for a big run on the last day of what is normally the year's slowest month. Fueled by takeover speculation,

J.P. Morgan

(JPM) - Get Report

led the

Dow Jones Industrial Average on a 112-point surge today, and barely any sectors were left behind in a move that was both deep and wide.

The Dow gained 1% to 11,215.10 today, led by brokerages, banks and the tech components. The

Nasdaq Composite Index gained 102.53, or 2.5%, to 4206.34, and the

S&P 500 rose 15.09, or 1%, to 1517.68.

TheStreet.com Internet Sector

index, the DOT, ended down 2.89 to 840.46. The small-cap

Russell 2000 rose 5.56, or 1%, to 537.89.

The market rallied on softer-than-expected economic releases, as well as the speculation of a potential takeover of J.P. Morgan, which ran hard today, gaining $15.31 to $167.19 on chatter that the company could be purchased by a bank or European company. The rumors helped the

Amex Brokerage Index

to a 0.9% gain and the

Philadelphia Stock Exchange/KBW Bank Index

to a 3.2% rise.

The talk was fueled by yesterday's announcement that

Credit Suisse First Boston

intends to purchase

Donaldson Lufkin & Jenrette

(DLJ)

. Consolidation in the financial services arena has picked up in earnest recently, as brokerages attempt to compete with global investment firms and take advantage of the recent passage of relaxed financial services laws that allow for combinations between banks, brokerages, and insurance companies.

"This DLJ thing will touch off another scramble of these big operations to get bigger," said Doug Myers, vice president in equity trading at

IJL Wachovia

. "You're going to have this enormous oligopoly of firms that act as money-center banks and brokerages."

Outside of financial stocks, breadth was strong and volume was better than what would have been expected for a late August day, one day before the release of the August

employment report

and

National Association of Purchasing Management's Purchasing Managers' Index

-- a national survey of manufacturers on business conditions -- due out tomorrow. Technology stocks were strong today, led by big-cap names like

Oracle

(ORCL) - Get Report

, which gained $2.69 to finish at an all-time high of $90.94.

The sectors leading the way today were the

Nasdaq Telecommunications Index

, which rose 2.5%, and the

Nasdaq Biotechnology Index

, up 3.6%.

Some of the strength can be linked to this morning's economic data. The

Chicago Purchasing Managers' Index

(

definition |

chart) for August, which fell to 46.5 from 52. The report is a gauge of purchasing executives in the Midwest, viewed as a good proxy for manufacturing strength in that region. Below 50 indicates contraction in the sector. June

factory orders

(

definition |

chart |

source

) fell 7.5%, their largest drop on record.

"We waltz into tomorrow with less trepidation about payroll data," said Brian Piskorowski, market analyst at

Prudential

. "Tech stocks have had a fantastic run in August. In a moderating economy, the Fed on hold has left us with a bullish bias."

For the month, the Dow gained 6.6%, and the Nasdaq tacked on 12%. The S&P rose 6.1%, and the Russell gained 7.4%. Breadth was strong today -- winners finished ahead of losers 17 to 11 today on the

New York Stock Exchange, and up 25-16 on the Nasdaq Stock Market.

"The market has broadened out in terms of participation," said Alan Skrainka, chief market strategist at

Edward Jones

. "It's a great contrast to last year's performance, when just a handful of stocks did well and everything else did poorly."

The recent action seems to imply that the investing community has, for now, put the Fed on the shelf. Looking out six months, the expectation is that the incremental slowing that's expected to surface will have done so without any inflation problems.

Ford: Built for a Trader to Sell

That's not to say everyone participated today. The second most-actively traded stock on the Big Board today was

Ford

(F) - Get Report

, which continues to struggle with its image, as its tire recall debacle continues. The government reportedly is concerned that the pattern of tire-failure has been apparent for some time.

The company has been forced to recall millions of Bridgestone tires outfitted on Ford Explorer vehicles, and its CEO Jacques Nasser (who owns three Explorers, we hear) will testify at a House committee hearing Sept. 6 on the recall. Ford lost 6.3% today to finish at $24.25.

Meanwhile, the retailers were hammered today. This morning's individual retail sales reports took some of the luster off some of those names, especially

Gap

(GPS) - Get Report

after it said its August same-store sales dropped 14% from the same month last year. Gap closed down 13 cents to $22.38.

J.C. Penney

(JCP) - Get Report

was also down, falling $1.19 to $14 after saying it sees third-quarter earnings under pressure.

Target

(TGT) - Get Report

also announced disappointing results, and that stock was crushed, off $2.88 or 11%, to $23.19. The

S&P Retail Index

slid 2.3%.

Clear Channel Communications

(CCU) - Get Report

fell 6.5% today, despite closing its merger with

AMFM

, which will increase its weighing in the

S&P 500 Index

.

A number of B2B stocks, including

Ariba

(ARBA)

bounced in the last half-hour of the session in month-end buying. Ariba finished up 3.2%.

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Market Internals

Breadth was strong on moderate volume.

New York Stock Exchange: 1,718 advancers, 1,150 decliners, 1.06 billion shares. 131 new 52-week highs, 27 new lows.

Nasdaq Stock Market: 2,481 advancers, 1,612 decliners, 1.9 billion shares. 179 new highs, 54 new lows.

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Most Active Stocks

NYSE Most Actives

  • Clear Channel: 37.8 million shares.
  • Ford: 28.4 million shares.
  • Gap: 25.9 million shares.

Nasdaq Most Actives

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Sector Watch

Banks benefited from the rally in brokerages.

Chase Manhattan

(CMB)

ended up 4.9%, and

Bank of America

(BAC) - Get Report

finished up 5.3%.

Insurance stocks remained on a tear after yesterday's ramp up. The

S&P Insurance Index

hit a new all-time high of 729.83 -- and

Lincoln Financial

(LNC) - Get Report

also hit a new high of $54.62.

Beverage companies were strong. The alcohol purveyors,

Anheuser-Busch

(BUD) - Get Report

and

Coors

(RKY)

, ended up strongly today.

PepsiCo

(PEP) - Get Report

also ended higher, gaining 1.6%.

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Bonds/Economy

Two weaker-than-expected economic releases gave the bond market a substantial boost, erasing many of the losses that occurred earlier in the week.

The benchmark 10-year Treasury note rose 17/32 at 100 4/32, yielding 5.723%.

The results of the Chicago Purchasing Managers' Index for August and the factory orders report for June are seen as lowering the odds the

Fed will hike interest rates again this year, a belief that bodes well for bonds.

The Chicago PMI fell from 52 to 46.5, its lowest since February 1996. Economists polled by

Reuters

had forecast a rise to 53.1 on average. Factory orders plunged 7.5%, their largest drop on record, vs. an average forecast for a 6.1% decline. The decline was broad-based.

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International

The

European Central Bank

raised the benchmark refinancing rate by 25 basis points to 4.5% at 7:45 EDT this morning. Economists had expected a rise of 25 or 50 basis points.

European shares had a mixed response to the announcement. In Frankfurt, the

Xetra Dax

ended up 30.89 to 7216.45. In Paris, the

CAC

finished down 9.20 to 6625.42.

Across the channel, London's

FTSE

closed up 57.60 to 6672.70.

The euro was down, trading at $0.8875.

Asian markets drifted lower.

Despite some buying in consumer electronic and Internet names, the Tokyo market slipped for a third day. The

Nikkei

lost 40.41 to close at 16,861.26, while the

Topix

index, which includes all shares listed on the

Tokyo Stock Exchange's

first section, shed 7.41 to 1511.44.

Bridgestone

, parent of Bridgestone/Firestone, tumbled 6.6%, hurt -- as Ford has been hurt -- by the tire fiasco.

The dollar was lately trading at 106.68 yen.

Hong Kong's Hang Seng index rose 1.63 to 17,097.51 in light trading.

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