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Dow jumps nearly 900 as investors seek bargains

(Agencies)
Updated: 2008-10-29 06:32

Even oil stocks shot higher, withstanding another drop in the price of crude -- Exxon Mobil Corp. and Chevron Corp. each rose more than 13 percent. Financials kept pace with the market's gains. JPMorgan Chase & Co. jumped 10.6 percent.

But the advance still left the Dow down 36 percent from its Oct. 9, 2007, record close of 14,164.53. I

t has lost 20.6 percent since the Sept. 15 bankruptcy filing of Lehman Brothers Holdings Inc., the event led to the near-paralysis of the credit markets and a series of dramatic government steps aimed at stabilizing a faltering economy.

Broader stock indicators also surged Tuesday. The Standard & Poor's 500 index rose 91.59, or 10.79 percent, to 940.51, and the Nasdaq composite index rose 143.57, or 9.53 percent, to 1,649.47.

The Russell 2000 index of smaller companies rose 34.15, or 7.62 percent, to 482.55.

Advancing issues outnumbered decliners by more than 4 to 1 on the New York Stock Exchange, where volume came to a moderate 1.72 billion shares compared with 1.34 billion shares traded Monday.

Bond prices were mixed as some investors looked for the safety of government debt. The yield on the three-month Treasury bill, regarded as the safest investment around and an indicator of investor sentiment, fell to 0.74 percent from 0.77 percent Monday.

The lower yield indicates an increase in demand. Meanwhile, the yield on the benchmark 10-year Treasury note rose to 3.84 percent from 3.69 percent late Monday.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude settled down 49 cents to settle at $62.73 a barrel on the New York Mercantile Exchange.

"I guess we're just coming out of this oversold situation. I think you've got a lot of players on the sidelines," said Dan Deming, a trader at Stutland Equities in Chicago. "There's just no one standing in the way right now."

He contends investors are also anticipating an interest rate cut. The Fed is expected to cut its target fed funds rate by half a point to 1 percent.

Investors were also buying overseas after huge declines Monday on economic worries. Japan's Nikkei stock average jumped 6.41 percent and Hong Kong's Hang Seng index surged 14.4 percent -- its biggest gain in 11 years -- a day after plunging more than 12 percent. Britain's FTSE 100 rose 1.92 percent, Germany's DAX index jumped 11.3 percent, and France's CAC-40 rose 1.55 percent.

The rally comes as stocks have been beaten down in the past six weeks over a freeze in the credit markets. Investors have worried about the economy's ability to avoid a severe downturn with loans more expensive and harder to obtain.

But Monday saw the start of the Fed's efforts to revive lending in the commercial paper market, where companies turn for short-term loans. And the Treasury Department is injecting $125 billion into nine of the country's largest banks this week and another $125 billion into other banks.

Some corporate news also gave a lift to stocks Tuesday. Boeing Co. rose $6.55, or 15.5 percent, to $48.91 after the company and its striking machinists' union hammered out a tentative four-year labor deal that could end a 53-day walkout that has idled factories and delayed jet deliveries.

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