Remarks from Federal Reserve Chairman Alan Greenspan and fresh signs that U.S. economic growth might be waning sent bond yields tumbling for the third session Friday, allowing U.S. stocks to tear higher in broad fashion.
The Nasdaq Composite drove ahead 91.30 points, or 3.2 percent, to 2,966.52, a record close. The Dow Jones Industrial Average advanced 109.23 points, or 1.0 percent, to 10,731.76. The action marked the 70th anniversary of the 1929 market crash. Thursday, the key yardstick rocketed 227.64 points, or 2.2 percent, its heftiest percentage win since March 5.
"Thursday confirmed what no one believed a week ago -- that this market's going a lot higher," said Frank Calta, director of equity trading and institutional sales at George K. Baum. "It just feels good. I'm seeing major institutional buyers."
Friday's action occurred as financial issues passed the leadership torch over to the technology sector.
"Recently, this market had no leadership," said Calta. "There is now -- and it's technology."
The Standard & Poor's 500 Index rose 1.5 percent. The Russell 2000 Index of small-capitalization stocks gained 1.4 percent.
Up and down the technology corridor, computer-related names piled on thick rises, with the semiconductors standing high atop the complex. Upbeat comments from Intel played a pivotal role in the move.
Elsewhere, retailers were the market's co-stars for the second day.
In a speech at a Florida meeting of business executives late Thursday, Greenspan said a significant upturn in the growth of productivity in recent years has boosted the U.S. economy and kept inflationary pressures under control.
He suggested that the Fed's two interest rate hikes this summer are keeping the economy on a path of non-inflationary growth.
"This process of containment may already be significantly advanced," Greenspan said in citing the impact higher market interest rates could be having.
In the bond market, news that September new home sales plunged 12.8 percent to their lowest pace since December 1997 aided sentiment, as did more short-covering and typical month-end buying. Additionally, a substantial drop in the prices-paid component of the October Chicago Purchasing Managers Index comforted traders.
Too, a BusinessWeek article reinforcing the view that the Fed's tightening cycle could end after a possible rate hike in November added to the positive sentiment. The 30-year Treasury leaped 1 7/32, to yield 6.163 percent.
There wasn't much in Thursday's roaring stock market advance for analysts to complain about. NYSE volume, at 1.13 billion shares, was the heaviest since April 19's 1.21 billion, indicating strong conviction behind the move. Breadth, at 22 to 9 on the Big Board and 3 to 2 on the Nasdaq was good, but not outstanding. Critically, the NYSE Finance Index exploded for a 5.9 percent gain, the densest since the 9.2 percent vault that came two day after the Black Monday crash of 1987.
Elsewhere in Thursday's action, the AMEX Broker-Dealer Index bolted 8.3 percent, the most since the 8.9 percent jump of Nov. 23, 1998. And the S&P Bank Index catapulted 6.4 percent, its biggest move since the 7.0 percent rise of Oct. 9, 1998.
Friday, breadth was very good on the NYSE, with winners dusting losers by 11 to 5. Advancing issues led decliners by 11 to 8 in the Nasdaq Stock Market.
Big Board volume slowed 3 percent to 1.09 billion shares.
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