Dow posts biggest 1-day gain in 4 years
NEW YORK » Wall Street soared yesterday, propelling the Standard & Poor's 500 index and Dow Jones industrials to record highs as bright spots among generally sluggish retail sales allowed investors to toss aside concerns about the health of the economy.
The rally, which included the Dow's biggest one-day percentage gain in nearly four years, was perhaps surprising given that there was no extraordinary announcement or other catalyst usually seen with such a huge gain, and that it came before most companies have announced their second-quarter earnings.
The rise also marked a sharp contrast to the start of the week, when stocks fell sharply amid concerns that some hedge funds could succumb to ill-placed bets on the housing sector.
Several reports beat Street expectations -- notably that of Wal-Mart Stores Inc., the world's largest retailer, which posted a better-than-expected 2.4 percent jump in sales at stores open at least a year.
"It's a relief that things weren't as bad as people expected," said Bill Schultz, chief investment officer at McQueen, Ball & Associates, referring to the retailers' reports and the economy at large. "We're maybe getting slower growth but not the fall-of-the-cliff economic scenarios," he said of investors' reading of the economy.
But, Schultz said, "I think it is, over the near-term, a little bit over done, certainly on a two-day basis," he added, referring to the rally.
The S&P 500 rose 28.94, or 1.91 percent, to 1,547.70, above its record close of 1,539.18, set June 4.
The Dow shot up 283.86, or 2.09 percent, to 13,861.73; its previous record close was 13,676.32, also set June 4. The increase was the biggest percentage gain for the blue chip index since October 2003 and the biggest point gain since October 2002. The Dow also reached a new trading high of 13,869.94.
The Nasdaq composite index rose 49.94, or 1.88 percent, to 2,701.73; yesterday's gain was the biggest percentage increase since March, and the last time the Nasdaq closed at around yesterday's level was Feb. 1, 2001.
Advancing issues outnumbered decliners by 3 to 1 on the New York Stock Exchange, where volume came to 1.66 billion shares compared with 1.44 billion traded Wednesday.
The Russell 2000 index of smaller companies rose 15.21, or 1.81 percent, to 855.18.
Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 5.13 percent from 5.09 percent late Wednesday. The dollar was generally lower against other major currencies, dropping to a new record low versus the euro and a 26-year low against the British pound. Gold prices rose.
Light, sweet crude fell 6 cents to $72.50 per barrel on the New York Mercantile Exchange.
Wall Street, whose advance this year has been powered in part by a cascade of buyout news, received an additional boost after mining company Rio Tinto offered to buy Canadian aluminum producer Alcan for $38.1 billion. The offer topped a bid from Alcoa Inc. that Alcan's board rejected in May. Alcoa said after the closing bell that it is dropping its bid.
Alcan rose $8.85, or 9.9 percent, to $98.45, after hitting a 52-week high of $99.97. Alcoa shares rose $2.86, or 6.7 percent, to $45.29, topping a 52-week high of $42.90.