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Dow soars
record 500 points

The Nasdaq also jumps, by 134.77,
as technology stocks rebound
following a three-day slump

Associated Press

NEW YORK -- The Dow industrials roared nearly 500 points higher today in a record-shattering rise as investors poured money into blue chips that had been pared to bargain prices by Wall Street's frenzy for technology stocks.

And in a major reversal of roles, the strength in industrial stocks helped pull technology shares out of a three-day slump. The technology-laden Nasdaq composite index, which fell steeply enough in the morning session to tumble into what many on Wall Street consider a "correction," ended sharply higher.

The Dow Jones industrial average rose 499.19, or 4.9 percent, to close at 10,630.60. That easily shattered the previous record one-day rise of 380.53 points set Sept. 8, 1998, but was not close to a record percentage gain.

Still, the blue-chip index of 30 of the country's biggest companies is down 7.5 percent so far in 2000.

The Nasdaq composite index, home to many high-technology companies, ended the day up 134.77 points, or 2.94 percent, to close at 4,717.39. The index had fallen 127 points earlier in the day.

The Nasdaq is up 15.9 percent year to date.

At its low point today, the Nasdaq index was down 11.8 percent from its record close of 5,048.62 on Friday. Market watchers consider a loss of 10 percent a correction, which signifies a sudden reversal of a market trend but doesn't necessarily mark a long-term change.

The best evidence that corrections don't last forever came from the Dow. Investors' willingness to dump blue-chip stocks in favor of technology stocks pushed the Dow into a correction in mid-February, and the index has struggled until this week.

Advancing issues outnumbered decliners today by a whopping 4-to-1 margin on the New York Stock Exchange, with 2,431 up, 646 down and 405 unchanged. NYSE volume totaled 1.48 billion shares vs. 1.3 billion yesterday.

The NYSE composite index rose 29.42, or 4.86 percent, to 634.44; the American Stock Exchange composite index climbed 21.53, or 2.16 percent, to 1,017.65; and the Russell 2000 index of small-company stocks gained 15.37, or 2.75 percent, to end at 574.24.

The price of the Treasury's main 30-year bond was up 1/2 point, or $5.00 per $1,000 in face value; its yield fell to 6.04 percent from 6.07 percent yesterday. Prices and yields move in opposite directions. (See story, page B-3.)

While Wall Street analysts rejoiced in the rally, few were willing to guess how long it will last.

"It's too soon to tell whether this is anything more than a short-term head fake," said David G. Sowerby, vice president at Loomis, Sayles & Co. "But a wide range of stocks are participating and it looks very good."

The market's early strength came from long-scorned industrial stocks.

Today, many of the blue chips that have been beaten down in recent weeks enticed investors as relative bargains. Johnson & Johnson, 3M and General Electric all rose.

Also, American Express and J.P. Morgan gained. Financial services companies were helped along by an inflation report that was no worse than expected.

(Among local companies, Bank of Hawaii parent Pacific Century Financial Corp., First Hawaiian Bank parent BancWest Corp., and Hawaiian Electric Industries Inc. all rose sharply.)

In a sign of investors' optimism, stocks rose even some decidedly mixed news on inflation. The Labor Department's Producer Price Index showed that wholesale prices surged 1 percent in February, the largest gain in nearly 10 years.

Investors were heartened by the fact that the "core" rate of inflation at the wholesale level, which excludes the volatile energy and food categories, matched expectations with a 0.3 percent gain in today's report.

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Bond prices rise

Bloomberg News

NEW YORK -- U.S. Treasuries rose after a producer price report showed inflation stayed tame outside of energy and food costs, and as the government bought back $1 billion of 30-year bonds for the second time this month.

"Excluding energy and tobacco the report looked good for Treasuries" and that led traders to reverse earlier bets that bonds would fall, said Michael Cheah, who invests $1.5 billion at SunAmerica Asset Management. With the buyback, people knew there was "a big buyer out there" so bonds got added lift, he said.

The Treasury Department repurchased bonds that mature between 2018 and 2021, at an average yield of 6.358 percent. It received offers of $6.446 billion from dealers. Cheah, who didn't take part in the buyback, sold bonds to lock in this week's 2 percent gain, including reinvested interest.

The price of the Treasury's main 30-year bond rose point, or $5.00 per $1,000 in face value; its yield fell to a four-month low 6.04 percent from 6.07 percent yesterday. Ten-year yields fell 5 basis points to 6.24 percent while two-year yields fell 2 points to 6.47 percent. Thirty-year bonds pared gains of as much as point after the buyback as dealers sold debt not repurchased by the Treasury.

While prices paid to producers overall rose a greater-than-expected 1 percent in February, most of the increase was due to rising costs for gasoline and heating oil. Excluding food and energy, the 0.3 percent rise was in line with expectations. The Federal Reserve is still expected to raise its target lending rate for a fifth time since June at a meeting Tuesday to keep inflation in check.