|
Wall St. skyrockets
|
 |
October 28, 1999: 5:21 p.m. ET
Benign inflation news calms inflation jitters; volume heavy as indexes surge
By Staff Writer Jill Bebar
|
NEW YORK (CNNfn) - U.S. stock markets staged a broad-based and forceful rally Thursday. Market-friendly inflation reports boosted share prices. Sharp gains in financial shares for the second consecutive session also provided support.
The Dow Jones industrial average surged 227.64 points, or 2.2 percent, to 10,622.53. On the New York Stock Exchange, gainers outpaced losers 2,192 to 901 as trading volume reached 1.1 billion shares, the third heaviest day of the year.
The Nasdaq composite rose 72.63, or 2.6 percent, to 2,875.15, while the S&P 500 index jumped 45.72, or 3.5 percent, to 1,342.43. (Click here for a look at today's CNNfn hot stocks.)
The bond market also advanced, with the bellwether 30-year Treasury bond rising 31/32 of a point in price, lowering its yield to 6.25 percent from 6.32 percent Wednesday.
The dollar rose against the yen but was little changed against the euro.
Inflation remains in check
All U.S. financial markets received a boost from news that economic growth rose in the third quarter but inflationary pressures remained in check.
Gross domestic product, a measure of the value of goods and services produced in the nation, rose at a 4.8 percent annual rate in the quarter compared to an expected 4.7 percent. The GDP implicit price deflator, the most closely watched inflation gauge in the report, rose 0.9 percent in the July-September quarter, well below expectations for an increase of 1.2 percent. The number soothed some of Wall Street's chronic fears of rising prices.
In addition, the employment cost index, a measure of the rate of change in total employment compensation, rose 0.8 percent in the third quarter, slightly below forecasts of 0.9 percent. The index is known to be closely watched by Federal Reserve Chairman Alan Greenspan.
"The inflationary news today was extraordinary. Even though we are seeing upward pressure on wages, it's not overwhelming. We are seeing some upward pressure on prices, but it remains very benign," said Hugh Johnson, chief investment officer at First Albany.
Aside from economic news, market participants awaited Greenspan's speech Thursday evening to a business group in Boca Raton, Fla. The Fed chief is scheduled to speak on technology and the economy.
Technology earnings focus
In a week heavy with earnings from many technology leaders, profit warnings in the sector continued to raise concerns among investors, but failed to stop the broad market rally from gathering speed.
Among individual shares, Amazon.com (AMZN) plummeted 4-15/16 to 71. The Internet retailer posted better-than-expected third-quarter results after the closing bell Wednesday, but warned of increased costs in the current quarter.
Hewlett Packard Co. (HWP) rebounded from Wednesday's sharp decline, closing up 4-1/4 at 71-1/4. The firm issued a profit warning late Wednesday for its fourth quarter, blaming problems in its computer server division.
Microsoft Corp. (MSFT) slipped 1 to 89-7/8. The Wall Street Journal reported Thursday that major personal computer makers are working on products that won't use Microsoft's flagship operating system, Windows.
Intel Corp. (INTC) also was in the spotlight, rising 2-3/4 to 72-3/16. Intel's shares skidded Wednesday on news Salomon Smith Barney cut its earnings estimates. The chip maker is having manufacturing problems as well as trouble meeting demand for its products.
In other earnings news, MCI WorldCom Inc. (WCOM) climbed 6-1/16 to 83-5/8 on stronger-than-expected third-quarter profits. The company said it benefited from substantial growth in data and international services. The communications firm earned $1.09 billion, or 55 cents per diluted share, a penny ahead of forecasts.
Infinity Broadcasting Corp. (INF), a unit of CBS Corp. (CBS) , advanced 2 to 33-7/8. It reported third-quarter revenue of $619 million compared to $534 million in the year-earlier period.
Dow component Procter & Gamble (PG) reported first-quarter earnings of $1.27 billion, or 88 cents per diluted share, excluding restructuring charges. The results were in line with expectations. Its shares climbed 5-3/8 to 104-5/8.
Financials on a roll
Financial issues continued to post gains following Wednesday's late surge in the sector, as well as falling bond yields and the market friendly inflation data.
Among the Dow components, Citigroup (C) jumped 2-7/8 to 54, American Express (AXP) ended up 10-3/8 to 161 and J.P. Morgan (JPM) added 3-9/16 to 132-1/16.
|
|
|
|
|
 |
|
