Stocks Rally on Heavy Turnover As the Dollar and Bonds Stabilize --- Industrials Gain 66.47 Points In Second-Biggest Rise; Surge Surprises Analysts
NEW YORK -- Stock prices surged in heavy trading yesterday as the Dow Jones Industrial Average posted its second-biggest one-day point rise, climbing 66.47 to 2337.07.</br></br>Analysts said the increase reflected relief that the dollar and the bond market appeared to be stabilizing after recent bouts of weakness. Bond prices rallied late yesterday following a shaky start, while the dollar firmed slightly on average, as central banks intervened to support the U.S. currency.</br></br>Even so, analysts were surprised at the magnitude of the stock market rally. "At the beginning of the week, the bond market looked terrible and people were expecting stocks to go down another 40 or 50 points," said Donald Crooks, a top equity trader at Morgan Stanley & Co. But selling pressure dried up yesterday, he said. By the end of the day, "all kinds of clients, from fast (trading accounts) . . . to big institutions, were in there buying."</br></br>Stock market investors were cheered by "the lack of follow-through" in the recent negative trends for the dollar and the bond market, said Alan Shaw, a senior vice president at Smith Barney, Harris Upham & Co.</br></br>"Some people had given up on the dollar, or decided that interest rates were heading through the roof," Mr. Shaw said. "Well, it isn't happening yet. Instead, the dollar shows signs of stabilizing above 140 yen, and the bond market is getting support from the bond futures market."