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Dow soars 198
Associated PressNEW YORK -- Stocks mounted a surprising advance today as investors anticipated that the Federal Reserve's meeting tomorrow will bring the central bank close to the end of a year-long cycle of interest rate increases.
The Dow Jones industrial average rose 198.41, or 1.9 percent, to close at 10,807.78. The Nasdaq composite index rose 78.59, or 2.2 percent, to 3,607.65, and the Standard & Poor's 500 rose 31.40 to 1,452.36. Advancers beat decliners by a 3-to-2 margin on the New York Stock Exchange, with 1,757 up, 1,140 down and 501 unchanged. NYSE volume was 851.16 million shares vs. 862.08 million Friday. The NYSE composite index rose 12.92 to 655.78; the American Stock Exchange composite index gained 9.34 to 945.55; and the Russell 2000 index climbed 6.87 points to 497.81. The price of the Treasury's 30-year bond rose 20/32 point, or $6.25 per $1,000 in face value; its yield fell to 6.16 percent from 6.20 percent Friday.
Stock trading volume was extremely light, indicating that few investors were willing to take on major new positions. But rate-sensitive stocks including J.P. Morgan posted strong gains that defied conventional wisdom that rising interest rates are bad for stocks.
Analysts said investors were speculating that if the Fed raises rates by a half-percentage point tomorrow central bankers may be finished with their cycle of raising interest rates. The Fed's Open Market Committee is widely expected to raise rates for the sixth time since last June in its continuing effort to cool the economy.
Today, the Fed offered the latest indication that the economy remains extremely robust. The Fed said industrial production posted its biggest leap in April in more than a year, as output at the nation's factories, mines and utilities rose 0.9 percent.