Dow regains 173
as interest rates fall
The blue-chip average is at
Star-Bulletin wire services
its highest level in nearly a monthNEW YORK -- The Dow Jones industrial average jumped to its second-biggest point gain ever today, rising to its highest level in nearly a month, as long-term interest rates fell back toward 7 percent in the bond market. The Dow gained 173.38 points, or 2.6 percent, to close at 6,833.59, bringing the blue-chip barometer's rebound to 442 points, or 7 percent, in just seven sessions.
Today's gain put the Dow above 6,800 for the first time since late March and beat last Tuesday's 135-point rally, which had been the biggest point gain since a 186.84-point jump two days after the Black Monday crash of 1987.
The Dow has now wiped out more than half of its recent 700-point slide, but still stands about 250 points shy of its best close of 7,085.16, set March 11.
Most broad measures also spiked higher this afternoon as bonds rallied after an encouraging auction of new Treasury securities. As bond prices rose, the benchmark yield on the 30-year Treasury bond fell to 7.04 percent. A week ago, the long-bond yield -- a key influence on borrowing costs -- rose to a nine-month high of 7.17 percent amid mounting inflation jitters.
For the third straight session, trading was rather sluggish until the afternoon. Faced with a drought of new economic data, investors had been reluctant to bid aggressively, particularly after last week's big advance.
The American Stock Exchange composite was dragged lower by Viacom Inc., which warned of weak results at its Blockbuster unit and announced the resignation of Bill Fields, a highly regarded former Wal-Mart executive hired to help turnaround the struggling video rental business.
The Dow's strongest issues were Procter & Gamble, General Electric, and 3M, which rose after the company reported better than expected first-quarter profits. AT&T Corp., which fell again following yesterday's weak first-quarter report, and Philip Morris Cos. were the only two declining issues in the Dow.
Advancing issues outnumbered decliners by more than a 3-to-2 margin on the New York Stock Exchange, with 1,534 up, 969 down and 841 unchanged.
NYSE volume totaled 501.98 million shares, up sharply from yesterday's 393.65 million.
The Standard & Poor's 500-stock list rose 14.27 to 774.64, and the NYSE composite index climbed 6.44 points to 405.84.
The Nasdaq composite index rose 8.79 to 1,212.74, but the American Stock Exchange composite index fell 6.51 to 544.96.
Yesterday, stocks pulled back after another inflation warning from the Federal Reserve height ened fears the central bank will try to slow borrowing and spending with a sharp increase in interest rates. Last month, the Fed raised one of its key lending rates for the first time in two years, spurring a selloff in the markets.
Today's market rally came after the Labor Department reported that a new experimental index of consumer price changes rose 0.2 percent last month. That's a slower pace than the government's main inflation gauge and the latest sign the official CPI exaggerates Americans' cost of living.
"Prices at the consumer level still don't reflect pressures from higher production costs and labor costs. They have not been passed onto the consumer yet," said Anthony Chan, chief economist at Banc One Investment Advisors Corp. in Columbus, Ohio.
Bloomberg News contributed to this report.