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 |  Subject: Strongest Election Day Stock Rally in 24 Years  Wed Nov 05, 2008 6:50 am | |
| Wall Street built on recent gains Tuesday as reduced volatility and easing in the credit markets helped give stocks their strongest Election Day rally in 24 years.
The Standard & Poor’s 500-stock index closed above 1,000 for the first time since Oct. 13, gaining 4.08 percent, and the Nasdaq composite index had its sixth consecutive daily rise.
At the close, the Dow Jones industrial average was up 3.28 percent, or 305.45 points, to 9,625.28. The broader S. & P. index gained 39.45 points, to 1,005.75, and the Nasdaq rose 3.12 percent, or 53.79 points, to 1,780.12.
Crude oil settled at $70.53 a barrel, up $6.62 in New York trading on speculation that the world’s largest oil exporter, Saudi Arabia, had cut supplies to some buyers.
Historically, Wall Street has enjoyed a bounce in the fourth quarter after a presidential election as investors breathe a sigh of relief that the long election cycle, with its accompanying uncertainty, has ended. Some analysts said investors seemed to be trying to get a jump on the expected rally by buying on Election Day.
“We don’t know if it’s the end of the bear market yet, but it looks as though the bear has taken a nap,” said Sam Stovall, chief investment strategist at Standard & Poor’s equity research. “So investors are thinking, let’s enjoy a bit of a relief, both from the market’s lows and from the endless pre-election rhetoric.”
Other analysts said they believed the election had only a peripheral effect on the market, as there had been no major surprises. More important to the rally, they said, was a continuing round of coordinated interest rate cuts worldwide, a further thaw in the credit markets and the increasing resiliency of the markets to the daily drumbeat of bad economic news. The extreme volatility of recent weeks has calmed, though trading volume remained light.
The Chicago Board Options Exchange’s volatility index dipped below 50 for the first time since Oct. 14. The Dow Jones industrial average has rallied 18 percent since the close on Oct. 27, including the 10.9 percent gain on Oct. 28.
“Investors are starting to look ahead of some of these numbers to 2009, and they are starting to see a bit of recovery,” said Ryan Larson, head equity trader at Voyageur Asset Management. “Some of the volatility is coming out of the marketplace.”
The markets showed little reaction as the government reported that new orders for manufactured goods in September dropped $11.2 billion, or 2.5 percent, to $432 billion, a larger-than-expected decline. That came after a 4.3 percent decrease in August.
It was the second negative manufacturing report in two days. On Monday, the Institute for Supply Management’s index of manufacturing activity in the United States fell to 38.9 in October, from 43.5 in September, the worst reading since September 1982. The markets also seemed to take that news in stride, spending the day trading in a narrow range before eventually ending the day flat.
The rally that unfolded on Wall Street was broad-based. All industry sectors in the S.& P. index rose, led by energy stocks. Among the 30 blue-chip stocks that make up the Dow, General Electric, Verizon Communications and Caterpillar were among the strongest performers.
The stock exchange first opened for trading on Election Day in 1984. That year, the Dow rose 1.2 percent, a gain not topped since, as Ronald Reagan was re-elected.
Shares of MasterCard, the world’s second-biggest credit card company after Visa, jumped 18 percent, to $170.24, after the company said that higher overseas revenue had helped bolster profit.
Still, the company warned that the economic slowdown would affect profit in the near term.
Building on a trend from the last several days, the credit markets eased further on Tuesday, with interbank and corporate borrowing rates declining significantly. The London interbank offered rate, or Libor, a benchmark that banks charge one another, fell to 0.375 percent.
The Treasury’s 10-year bill rose 1 17/32, to 102 7/32. The yield, which moves in the opposite direction from the price, was 3.72 percent, down from 3.91 percent late Monday.
Stock markets were also higher in Europe and Asia. The Dow Jones Euro Stoxx 50 index, a barometer of euro zone blue chips, rose 5.56 percent, while the FTSE 100 index in London jumped 4.42 percent. The CAC 40 in Paris gained 4.62 percent, and the DAX in Frankfurt was up 5 percent.
In Tokyo, the Nikkei 225 stock index rose 2.8 percent on Wednesday morning, buoyed by a softer yen and the rally in the American markets.
In Sydney, the S.& P./ASX 200 index was 1.9 percent higher on Wednesday morning. The Australian central bank surprised the markets on Tuesday with a larger-than-expected interest rate cut. The bank cut its main interest rate target by three-quarters of a percentage point, to 5.25 percent, rather than by the half-point that had been widely expected.
http://www.nytimes.com/2008/11/05/business/05markets.html?partner=rssnyt&emc=rss |
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