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Dow boosts the Americas
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September 8, 1998: 6:01 p.m. ET
Canada, most Latins ignore fiscal woes, surge in step with Wall Street rebound
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NEW YORK (CNNfn) - A record-breaking bull session on Wall Street made traders throughout the Western Hemisphere forget economic worries that have plagued local stock markets in recent weeks, resulting in sharp gains for most exchanges.
In New York, the Dow Jones industrial average rose 380.53 points, nearly 5 percent, to 8,020.78 - its largest one-day points advance in history.
Federal Reserve Board Chairman Alan Greenspan made a speech after the market close on Friday, which analysts believe opened the door for a possible cut in rates. A U.S. rate fall is seen as vital to stemming the spread of deflation from emerging markets.
Traders said the prospect of a U.S. rate cut and a lower U.S. currency should give a tremendous boost to markets around the world.
Brazil's Bovespa tumbled 2.5 percent in afternoon trading before seesawing drastically toward the day's close, torn between Wall Street's triumphant session and disappointment after the government announced measures to cut the fiscal deficit.
"The intentions were good, but the market wants to see practical results," one economist said.
Sao Paulo's key Bovespa index ended down 20 points, 0.33 percent, at 5,818 after spiking more than 5 percent before the measures were announced.
The government will cut four billion reais in social and infrastructure spending to achieve a primary surplus of five billion reais, the Finance Ministry said.
Mexican stocks closed higher after a volatile session in which global events sent the key index zigging and zagging throughout the trading day but finally into the black, dealers said.
The IPC index of leading issues finished 42.7 points or 1.3 percent higher at 3,237.24 after charging to robust early gains, falling back into negative territory, and then recovering once again before the final bell.
"The Mexican stock exchange is being held up with support from the Dow," Bursametrica economist Roberto Galvan said.
The Argentine bourse ended off earlier gains, dragged lower by ADR prices in New York and renewed market nervousness.
"When there is a holiday in New York and our bourse rises, our ADR prices start lower and drag our shares down," trader Alejandro Pirillo at Nacion Bursatil brokerage said.
The MerVal index of most-traded stocks closed down 2.89 percent, 10.87 points, at 365.04.
Traders added that losses by Brazil's bourse and continuing investor caution also deepened the MerVal's slip.
"Brazil's decline is not going to help us here," said Alfredo Ferrarini at Cohen brokerage.
Caracas share prices closed higher, buoyed by gains on Wall Street and a softening of presidential front runner Hugo Chavez's rhetoric.
According to preliminary figures, the 15-stock IBC index rose three percent to close at 2,856.19 points as 57 million shares traded, worth one billion bolivars ($1.8 million).
"I think Chavez's declarations helped calm the market, people are looking at him slightly differently," Vencred broker Alvaro Frias said.
Fears that the 1992 coup leader, who comfortably leads in polls, will turn back the economic clock with anti-market policies if he wins the Dec. 6 presidential vote, have combined with a slump in oil prices to tumble the bolsa over 70 percent this year.
But in an interview, Chavez emphatically denied he ever favored a moratorium on Venezuelan debt and said he will not devalue the currency or set exchange controls if elected.
Canadians rocket with Dow
Toronto stocks climbed 4.09 percent as investors bought tried-and-true blue chips on renewed hopes for a U.S. interest rate cut.
The Toronto Stock Exchange's benchmark 300 Composite Index rose 234.59 points to 5,977.10. Volume was heavy at 129 million shares.
"It's a Greenspan rally. The market was oversold in the short term and people needed a reason to buy," said TD Evergreen research manager Craig Strachan. "People are buying large-cap quality stocks, small caps are being ignored."
Companies with a market capitalization of more than C$600 million are considered big cap in Canada while the U.S. threshold stands at $1 billion.
Thirteen of Toronto's 14 subgroups ended higher, led by a 7-percent gain from the financial sector. 
-- from staff and wire reports
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