Bull Session
Showing a determination to buy not seen in months, investors bid stocks sharply higher Monday in a broad rally that propelled the Dow Jones industrials up more than 200 points for the second straight session.
Analysts said the market's growing belief in an impending economic recovery has finally given Wall Street a reason to rally. Blue chips and technology stocks soared, despite an earnings warning from tech bellwether Oracle.
The Dow closed up 217.20, or 2.1 percent, at 10,586.06, according to preliminary calculations, its best finish since July 19, when the average was 10,610.00. The Dow has advanced 479.93 since Friday, its biggest two-session point gain since December 2000.
"I'm a happy rabbit," said Gil Knight, who helps manage $240 million for Allied Investment Advisors. "We had good manufacturing numbers last week, and we've had good consumer confidence figures. The market is telling us that things seem to be showing a real pickup in the economy."
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The Standard & Poor's 500 index advanced 22.00, or 1.9 percent, to 1,153.78, barely above its 2002 debut.
"The earnings leverage you can get when an economic recovery takes hold is what has the market excited," said Kathy Dodd, value team leader for Bank One Investment Advisors Corp., which oversees $143 billion. "A week ago, everyone was on the sidelines saying, 'You go first.' Someone finally went first and everyone else is jumping in."
Indeed, the rally reflected momentum created by the barrage of good economic news last week, including strengthening manufacturing numbers and positive comments from Federal Reserve Chairman Alan Greenspan. Analysts also say Wall Street's mood is improving. Investors are looking for reasons to buy — rather than to sell, as had been in the case in previous weeks amid accounting scandals at Enron and other companies.
Among blue chips, J.P. Morgan rose $2.84 to $32.50. General Motors advanced $3.73 to $58.70.
Transportation stocks surged on better-than-expected revenue and traffic numbers from several airlines. Continental Airlines rose $2.10 to $34.80, while American Airlines' parent company, AMR Corp., climbed $1.80 to $29.05.
The Dow Jones transportation average, which tracks the broader sector, soared 152.83, or 5.3 percent, to 3,049.96.
The tech sector also benefited from Wall Street's inclination to spend. Cisco Systems rose $1.26 to $16.26, while rival Juniper Networks soared $1.90, or 19.3 percent, to $11.73.
Still, Oracle slid $2.32 to $13.67 after Merrill Lynch reduced its rating on the stock from "buy" to "neutral." The announcement followed the software maker's announcement Friday it was reducing estimates for its third-quarter results.
The broader market's advance was the second straight session of significant gains, raising hopes that the long-awaited recovery was beginning. But many analysts advise prudence; they note that stocks are still likely to move up incrementally and that investors, who have watched previous rallies fizzle, are more inclined to take profits rather than risk losing them.
The economic recovery is also expected to be rather subdued, unlike the explosive growth that the market enjoyed in the late 1990s, meaning that profits and stock prices might not rise as much as hoped.
Advancing issues led decliners nearly 3 to 1 on the New York Stock Exchange in heavy trading. Volume came to 1.59 billion issues, compared with 1.44 billion issues Friday.