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Dow jumps nearly 900 as investors seek bargains

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

NEW YORK – Wall Street had another astounding advance Tuesday, with the Dow Jones industrials soaring nearly 900 points in their second-largest point gain ever as late-day bargain hunters stormed into the market. The Dow and the Standard & Poor's 500 index each shot up nearly 11 percent.

Wall street broker William F. Lawrence looks at a monitor as he works on the trading floor of New York Stock Exchange shortly after the market opened Tuesday, Oct. 28, 2008. [Agencies]

There didn't appear to be any one catalyst for the surge that saw the Dow nearly double its gain in the last hour of trading.

Many analysts said investors were grabbing up stocks in the belief that Wall Street had fallen too far in recent sessions; the Dow had dropped 500 points in two days.

Some said buying early in the day came from anticipation of an interest rate cut Wednesday by the Federal Reserve, and the market just followed its recent pattern of building on its gains or losses in the last minutes of the session.

"There is nothing fundamental that came out today or yesterday that would take it up or down. We're all groping for something meaningful to talk about," said Bob Andres, chief investment strategist at Portfolio Management Consultants. "The market is exhausted from going down."

But given the relentless volatility in the market -- out of 20 trading days this month, there have been only two that didn't see the Dow close up or down in triple digits -- no one expects that stocks are now headed higher for good.

After Wall Street's devastating losses that slashed 2,400 points off the Dow in eight sessions, market veterans warned that the recovery would be rocky, including huge gains followed by huge declines.

"I don't think it will be a sustained move," said Matt King, chief investment officer at Bell Investment Advisors, of Tuesday's surge.

It was clear that investors wanted to buy -- they looked past news of a sharp drop in consumer confidence early in the session.

The Conference Board said its index of consumer confidence has fallen to 38 in October, well below the 51 analysts expected; with consumer spending accounting for more than two-thirds of economic growth, the reading was the latest in a long line of disappointing data.

The market's reaction was notable because it was investors' anguish over a likely recession that had them selling just days ago. But analysts don't necessarily see that change of heart as a sign of health.

"I would like to hope that a little bit of fear is being replaced by greed at this point," said Kim Caughey, equity research analyst at Fort Pitt Capital Group. "I'm not that happy, though. There's no big news out there."

The Dow rose 889.35, or 10.88 percent, to 9,065.12. That was its second-largest point gain, coming after the 936 points the Dow jumped on Oct. 13.

The Dow was up 456 points at 3 p.m., an hour before the close, and rose as much as 906.31 before edging back.

The gains in the 30 blue chip stocks were stunning -- Alcoa Inc. was up 19.25 percent, while Verizon Communications Inc. rose 14.63 percent.

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