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Market stages bulls' feast
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October 28, 1997: 5:26 p.m. ET
Buoyancy returns to stocks as Dow, Nasdaq hit record gains and volume
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NEW YORK (CNNfn) - U.S. stock markets soared back Tuesday with both the Dow Jones industrial average and Nasdaq posting their biggest point gains in history amid record volume.
It was a remarkable turn of events as the market came back triumphantly only a day after suffering its worst point losses ever.
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The Dow gained a record 337.17 points to close at 7,498.32, outstripping the previous record gain of 257.36 set less than two months ago on September 2. The blue chip index lost 554 points Monday and traded as low as 6,975.49 earlier on Tuesday.
Volume also soared on the New York Stock Exchange setting a record for the second day in a row. Some 1.21 billion shares changed hands, up from Monday's 685 million. Advances outnumbered declines 1,811 to 1,327.
Tuesday's rally restored about $384 billion of the $663 billion in market capitalization lost by U.S. stocks Monday.
Buoyed by the strength of U.S. economy, investors shrugged off a global market meltdown and flocked back to Wall Street to gobble up stocks.
The Dow pulled broader markets up as well, with the Nasdaq gaining a record 67.93 to 1,603.02, as a record 1.23 billion shares changed hands there as well. The S&P 500 was up 44.26 to 921.25.
Earlier, President Clinton said the market's roller-coaster ride should not take investors' attention away from the country's solid economic performance.
"I know today a lot of Americans are focused on the stock market and it may disappointing, but I think it is neither prudent nor appropriate for any president to comment on the hour-by- hour movements of the market," Clinton said in remarks at a Chicago school.
"I'd like to ask all of us to remember that our economy is as strong and vibrant as it has been in a generation," the President added.
But the bond market, which had enjoyed several days of gains as investors fled stocks, gave up ground Tuesday. The benchmark 30-year Treasury bond closed 1-/26/32 lower to yield 6.27 percent.
Only hours before, the stock market had sold off at the open after a global meltdown that started with Hong Kong's Hang Seng index losing 13.7 percent to 9,059 and Japanese and European stocks following suit.
But the bulls outweighed the bears on Wall Street and after only an hour of trading, stocks bounced back with a vengeance.
To some, Tuesday's gains were a sign that the worst may be over for the market -- for now.
"This is a selling climax. You can't tell a selling climax is over unless you get a short temporary rally," said Phil Roth, chief technical analyst at Morgan Stanley Dean Witter.
Others, like Smith Barney's veteran portfolio strategist Marshall Acuff, said this could be a perfect buying opportunity.
Meanwhile, Abby Joseph Cohen, co-chair of the investment policy committee at Goldman Sachs, said economic growth in the U.S. was likely to remain "solid" with the Asian crisis affecting it "only modestly." Cohen raised the equity weighting in her balanced model portfolio to 65 percent from 60 percent and reduced the cash portion to 5 percent from 10 percent. She kept bonds at 25 percent and commodities at 5 percent.
At the same time, J.P. Morgan raised the weighting of stocks in its model portfolio to 60 percent from 50 percent, lowering cash holdings to 10 percent from 15 percent and cutting bonds to 30 percent from 35 percent.
Market sectors that had been hit in the sell-off bounced back, with technology, financial, drug and international companies all posting strong gains.
Among leaders, Intel (INTC) was up 10-1/4 to 85. The stock was the most actively traded on the Nasdaq with over 36 million shares changing hands. Other technology stocks gained too, with Microsoft (MSFT) up 4-1/2 to 133-3/8 and Dell (DELL) up 9 to 91.
Technology stocks surging on the NYSE included Compaq (CPQ), up 6-3/4 to 67-1/4, Texas Instruments (TXN) rose 9 to 111-3/4, and IBM (IBM) was 9-3/16 higher at 99-3/16. Big Blue announced Tuesday that it had put aside $3.5 billion to buy back its own shares.
Among other sectors, Fleet Financial Group said it reached a deal to buy Advanta's credit-card business for $500 million. Fleet (FLT) shares were 5/8 lower at 63-3/4 while Advanta (ADVNA) was 15/16 higher at 34-7/16.
In earnings news Tuesday, UAL (UAL), the parent of United Airlines, announced third- quarter profits of $499 million or $3.75 a share, up from $475 million or $3.58 a share a year ago. UAL shares closed 1-3/8 higher at 87-1/2.
In other news, Apple's (AAPL) co-founder and interim chief executive Steve Jobs was said not to be interested in taking over the company on a permanent basis. Apple's shares closed 1-1/4 higher at 18-1/8.
Lifted by Wall Street's bold recovery, European stocks also climbed higher, finishing in negative territory but well off their lows. London's FTSE 100 index closed off 85.3 points, or 1.76 percent, at 4,755.40. The index had been down as much as 9.5 percent. In Frankfurt the DAX index closed 311.90 points, or 8.04 percent, lower at 3,567.22. And in Paris the CAC-40 index closed down 118.31 points, or 4.27 percent, at 2,651.33. 
-- by staff writer Malina Poshtova Zang
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