NEW YORK (CNNfn) - The Dow Jones industrial average rose a record 499.19 points Thursday, lifted as money poured into "old economy" stocks out-of-favor for much of the year. The blue-chip euphoria lifted the world's best-known index out of the hole that Wall Street considers a correction, handing the New York Stock Exchange its busiest trading day on record.|
Investors made heroes out of stocks such as American Express, J.P. Morgan and Minnesota Mining & Manufacturing - all down by double digits in the last three months.
The gains came after a batch of tame inflation figures eased Wall Street's worst fears about sharply higher interest rates to come, boosting expectations for strong corporate profits ahead.
"The rumors of the Dow's death has been much exaggerated," Art Hogan, chief market strategist at Jefferies & Co., told CNN's Street Sweep.
Less than two weeks ago a surprise profit warning from Procter & Gamble knocked 375 points off the Dow.
That seemed a distant memory Thursday, with the blue chip frenzy lifting 29 of the Dow's 30 stocks and spreading to the Nasdaq composite index, which broke a three-session losing streak. Only Dow member Microsoft, the world's most valuable company, failed to rise.
"It's phenomenal," said Charles Payne, head analyst at Wall Street Strategies. "We're breaking all sorts of technical resistance levels like a hot knife through butter."
But Goldman Sachs' Abby Joseph Cohen told CNNfn on Moneyline that investors should not look at this phenomenal rise as a trend for the year. (235K WAV or 235K AIFF)
The Dow soared 499.19 points, or more than 4.9 percent, to 10,630.60. The gain shattered the previous record, a 380.53-point rise set Sept. 8, 1998.
With the day's action, the index is now about 9.3 percent below its all-time high of 11,722 set Jan. 14, pushing it below the 10 percent dip Wall Street deems a correction.
Lifted by data
The Dow's rise began with the start of trading, when a tame rise in producer price data failed to confirm analysts' worst fears about climbing inflation. Analysts said the news suggests only modest interest rate hikes lie ahead.
"I don't see (the economy) overheating," Wall Street Strategies' Payne said. "We've got strong growth and controlled growth. "There still isn't any clear-cut sign of inflation."
The Nasdaq, meanwhile, reversed a 127-point loss earlier in the session, rising 134.66, or 2.9 percent, to 4,717.76. That broke three-sessions of double-digit losses.
Charles Lemonides, chief investment officer at M&R capital, told CNNfn that the day's action could be the beginning of a broad market advance, countering the narrow gains seen only by the Nasdaq.
The day's action supported that. The broader S&P 500 catapulted 64.66, or 4.7 percent, to 1,456.63.
And more stocks rose than fell. Advancers on the New York Stock Exchange swamped decliners 2,414 to 410 as trading volume topped 1.48 billion shares, a record. Nasdaq winners beat losers 2,259 to 2,004 with more than 2 billion shares changing hands.
In other markets, the dollar fell against the euro and was little changed versus the yen. Treasury securities rose.
Dow flexes muscles
The Dow's jump of more than 800 points in the last two sessions comes as investors fish for some of the cheapest of blue-chip stocks.
Among the big drivers, American Express (AXP: Research, Estimates) rocketed 10-7/8 to 143-3/4, J.P. Morgan (JPM: Research, Estimates) surged 7-1/8 to 124-5/8 and Minnesota Mining & Manufacturing (MMM: Research, Estimates) catapulted 5-9/16 to 88-1/16.
"A lot of these stocks were much higher a year ago than they are today," Ned Riley, chief investment strategist at State Street Global Advisors, told CNN's In the Money. "Clearly, the bottom-fishing issue is important and real."
Still, Paul Rabbitt, president of Rabbitt Analytics, told CNNfn's Talking Stocks he sees the Nasdaq resuming its lead as investors chase the highest growth tech companies. (408K WAV) (408K AIFF).
Even after the day's action, the Dow is still down 7.5 percent this year while the Nasdaq is up 15.9 percent in 2000.
But on Thursday, Nasdaq leaders surged alongside old economy stalwarts.
Oracle (ORCL: Research, Estimates) jumped 3-5/8 to 81-15/16, Intel (INTC: Research, Estimates) rose 4-7/8 to 125-1/16, and JDS Uniphase (JDSU: Research, Estimates) rocketed 10-11/16 to 129-7/16.
But Microsoft (MSFT: Research, Estimates), failed to rise, ending unchanged at 95-3/8.
Blue-chip stocks found support after the latest batch of economic indicators suggested inflation remains tame enough to keep the Federal Reserve from aggressively tightening credit, boosting expectations for strong corporate profits.
While producer prices posted their biggest monthly jump in more than nine years in February, the core rate, which excludes volatile food and energy costs, advanced at a more moderate pace of rose 0.3 percent.
"Inflation appears to be muted," said Alan Ackerman, senior vice president at Fahnestock & Co.
Separately, the Commerce Department reported that housing starts rose 1.3 percent to a 1.78 million-unit rate in February, suggesting the housing market remains strong, undeterred by the Fed's four rate hikes since June. Finally, the number of Americans filing new claims for unemployment benefits fell to 262,000 for the week ended March 11, the Labor Department said.