NEW YORK (CNNfn) - U.S. stocks rallied to new highs for the day in late trading Wednesday, catapulted by a joint intervention by Washington and Tokyo that put an end to the Japanese yen's slide and inspired hopes the Asian crisis can be brought under control.
News that the Federal Reserve and the Bank of Japan intervened in the foreign exchange market, selling dollars and buying yen, caused a sharp slide in the greenback and brought a sigh of relief to U.S. equity investors, who had feared the Asian economic crisis would worsen and the weak yen would eat into the bottom lines of large multinational corporations.
Shortly before 3 p.m. the Dow Jones industrial average surged 217.97 points, or about 2.5 percent, to 8,882.02. On the New York Stock Exchange, advances smothered declines 2,217 to 770 as trading volume reached 572 million shares.
The Nasdaq Composite rose 33.16, or 1.9 percent to 1,786.28 and the S&P 500 index gained 24.34, or 2.3 percent to 1,111.93.
The dollar slid as news hit the market that the Federal Reserve was selling dollars, signaling a major shift in Washington's tough currency stance against Japan. The intervention, the first for the Fed since 1992, knocked the dollar down about 8 yen from its Tuesday U.S. close.
The White House embraced the intervention and said the United States and Japan are prepared to continue their cooperation in world currency markets. Meanwhile, a top-level U.S. delegation, headed by Deputy Treasury Secretary Lawrence Summers, prepared to leave for Tokyo for emergency discussions on Japan's economic problems.
The dollar's skid quickly stung the Treasury bond market, taking the yield on the benchmark 30-year bond up to 5.74 percent as its price slid 1-13/32 of a point. Many investors feared that Japan might sell U.S. bonds to replenish its dollar reserves after Wednesday's intervention.
Focus on the big picture
All the excitement in the currency market and the speculation it provoked about the future of U.S. policy toward the Pacific Rim's crisis was balanced against an almost complete void of news on the corporate front.
Among the few newsmakers of the day, shares of online service provider America Online (AOL) soared 5-1/16 to 94-1/16 after the British newspaper Financial Times said the company had spurned a takeover offer from long-distance phone powerhouse AT&T (T).
Other Internet stocks followed in the rally, with Yahoo! (YHOO) climbing 9-1/16 to 131, Excite (XCIT) rising 6-5/16 to 73-5/8, and Lycos (LCOS) gaining 3-7/8 to 60-5/8.
Major technology issues also benefited from the buying spree, with Microsoft (MSFT) rising 2-1/16 to 91-15/16 and Dell (DELL) jumping 2-1/32 to 87. Dow member IBM (IBM) rose 1-9/16 to 111-9/16. On Tuesday, IBM's stock fell sharply after a Merrill Lynch analyst cut his earnings estimates for Big Blue, blaming the strong dollar.
Banking shares also showed strength in early trading, with Dow component J.P. Morgan (JPM) rising 2-1/2 to 120-3/8, Citicorp (CCI) surging 6-3/16 to 152-7/16, and Chase Manhattan (CMB) up 2-1/4 to 70.
Finally, a rebound in world oil prices helped fire up oil stocks, with Dow component Exxon (XON) rising 1-13/16 to 71-3/8 and fellow Dow member Chevron (CHV) gaining 2-7/8 to 84-1/8. 
-- by staff writer Malina Poshtova Zang
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