|
Wall Street on the mend
|
 |
September 1, 1998: 5:33 p.m. ET
Dow up 288 points, Nasdaq gains 76 as investors rush back to the market
|
NEW YORK (CNNfn) - Wall Street worked damage-control wonders Tuesday, sending the Dow industrials soaring into their second-best one-day point rally in history and giving the Nasdaq its largest one-day gain as investors traded a record number of shares.
A day after the Dow plummeted 513 points and the Nasdaq lost more than 140, many came to the market wondering if the worst was over. But after a volatile start, in which the Dow lost more than 130 points, market breadth improved and sentiment among investors became more upbeat.
The major stock indexes moved into positive territory at midmorning and held on to their gains for the better part of the session, charging to new highs for the day in the late afternoon.
The Dow Jones industrial average surged 288.36 points, or 3.82 percent, to 7,827.43, recouping more than half of Monday's 6.37 percent loss. Market breadth on the New York Stock Exchange was positive, with advances leading declines 2,011 to 1,217 on record trading volume of 1.21 million shares.
The Nasdaq Composite rallied 75.84, or 5.06 percent, to 1,575.09, its largest one-day point gain ever. The S&P 500 index rose 36.71, or 3.83 percent, to 994.24. The Russell 2000 index of smaller companies jumped 10.15, or 3 percent, to 348.10.
Despite the rally, some market players were still skeptical as a global economic slowdown continues to rage from Tokyo to Moscow and in between.
Marshall Acuff, equity strategist at Salomon Smith Barney, warned investors to prepare for more market seesawing as Wall Street gets used to expectations of slower earnings growth and a tamer economy. (261K WAV) or (261K AIFF)
But less-than-disastrous performances in world markets overnight and soothing words about the health of the economy from Washington helped provide some light at the end of Wall Street's tunnel.
Bulls vs. Bears
The market's steep gyrations elicited mixed forecasts from Wall Street's market experts, with some viewing Monday's carnage as a perfect buying opportunity while others warned of tougher times ahead and urged investors to seek safer havens.
Leading the pack of bulls, Goldman Sachs' Abby Joseph Cohen kept her optimistic market forecasts for the year, urged investors to stay calm and raised the stock allocation in her model portfolio to 72 percent from 65 percent, cutting the cash to zero.
But equally influential Merrill Lynch investment wizards advised investors to buy bonds, predicting more trouble ahead.
"With regard to the U.S. stock market, our experts believe that after a climactic low followed by an interim rally, there will likely be a retesting of the lows as stock prices align with slowing corporate earnings growth," Merrill Lynch Chairman and Chief Executive David Komansky and President and Chief Operating Officer Herbert Allison wrote in a note to employees.
And Prudential Securities' Ralph Acampora, a raging bull turned ravenous bear, reiterated his targets of 7,400 to 7,900 on the Dow and 950 to 1,010 on the S&P 500, first issued in August when Acampora warned of a 15- to 20-percent correction for stocks.
Meanwhile, President Clinton met with Russian President Boris Yeltsin in Moscow, urged the Kremlin to stick to market reforms, and praised the health of the U.S. economy.
But in a sign that Russia's political problems are here to stay, Communist leader Genady Zyuganov said his party, the largest group in the Russian Duma, would never approve Yeltsin's choice for prime minister, Viktor Chernomyrdin. The Duma, the lower house of the Russian parliament, rejected Chernomyrdin's candidacy Monday and is expected to hold a second vote on him Friday. If his nomination for premier is refuted three times in a row, Yeltsin must disband the parliament and call legislative elections.
Leaders of the European Union planned to issue a statement on Russia Wednesday and the International Monetary Fund was considering changing some aspects of its landmark loan agreement with Moscow. Neither pledged new funds to help the struggling country.
The bond market plunged as stocks rallied. Pressure from a weaker dollar also weighed on bonds. The benchmark 30-year Treasury bond fell 1-14/32 points in price for a yield of 5.33 percent.
The dollar fell sharply against the Japanese yen after the stock market in Tokyo refused to join Wall Street in Monday's tumble. The dollar also fell against the German mark as European bourses, too, recovered after a weak start to the trading session.
Testing higher ground
Back on Wall Street, banking and technology stocks, both pummeled in Monday's meltdown, took separate roads to recovery.
Among technology leaders, shares of Dell (DELL), which lost nearly 16 percent Monday, jumped 8-3/8, or 8.4 percent, to 108-3/8. Other stocks bruised Monday also rebounded, including Microsoft (MSFT), up 5-5/16 to 101-1/4, Intel (INTC), up 4-13/16 to 76, and Dow component IBM (IBM), 5-5/16 higher at 117-15/16.
The rally was far less impressive among financial stocks, the one sector on Wall Street where losses from investments overseas are being felt most immediately.
The parade of high-profile banks and investment houses declaring damage from the Russian market collapse was joined Tuesday by Bankers Trust (BT), which warned investors it would post a net loss in the third quarter, largely due to trading losses of at least $350 million. That loss came mainly from charges BT had to take as it tried to bail out of its Russian investments. Shares of BT fell 1-3/16 to 73-1/8.
Joining BT was British bank Barclays (BCS), which said the Russian crisis would suck 150 million pounds, or $252 million, from its pre-tax profits for 1998. American depositary receipts of Barclays rose 1/2 to 90-1/2.
Among other financial stocks, Citicorp (CCI) fell 1-11/16 to 106-5/8 and Chase Manhattan (CMB) rallied 2-3/8 to 54-7/8. The financial components of the Dow industrials, hurt badly Monday, put in a mixed performance. J.P. Morgan (JPM) rose 4 to 97-1/2, and American Express (AXP) climbed 4 to 82. Travelers (TRV), whose investment arm Salomon Smith Barney said it lost about $150 million in the last two months alone, fell 1 to 43-3/8.
Brokerage stocks also showed mixed results, especially after one of their own, Donaldson, Lufkin & Jenrette (DLJ) lowered its earnings estimates for the sector for the second half of the year. Shares of Lehman Brothers (LEH) rose 1/4 to 39-5/8 and Morgan Stanley Dean Witter (MWD) lost 7/16 to 57-5/8.
Finally, a series of share buyback announcements helped some stocks float above the water early Tuesday. Among them, Dow component Boeing (BA) saw its stock rise 2-1/8 to 33-1/16 after saying it would repurchase up to 15 percent of its common stock.
(Click here for a look at today's CNNfn market movers.) 
-- by staff writer Malina Poshtova Zang
|
|
|
|
|
 |
|
