Stock Prices Soar in Heavy Trading; Industrials Rise Record 75.23 Points --- Advance is Linked to Gains For Dollar, Bond Prices Volume at 209.5 Million
The stock market snapped a five-day losing streak with a vengeance, propelling the Dow Jones Industrial Average up 75.23 points, a record single-day advance.</br></br>Up only a modest 17 points around 2 p.m. EDT, the industrial average zoomed in the final two hours to close at 2568.05. Trading volume on the New York Stock Exchange was a heavy 209.5 million shares. The gain, amounting to some 3%, ended a five-session tailspin in which the average lost more than 120 points, 31 of them on Monday.</br></br>Bullish investors were encouraged by the dollar's advance against other currencies, especially the yen, and a solid gain in bond prices -- both of which were interpreted as signs that interest rates might not rise as much as had been feared.</br></br>Higher interest rates are anathema to stocks. Rising or high rates make bonds look more attractive than stocks to many investors, and eventually choke off the economic growth that fuels increases in corporate profits. A rise in the dollar is widely viewed as lessening pressure on the Federal Reserve Board to raise interest rates.</br></br>"I think this market was just waiting for some good news," said Laszlo Birinyi, head of equity market analysis with Salomon Brothers. According to his flow-of-funds calculations, a net of $1.1 billion was invested in stocks yesterday, making it the fourth best day in history on that basis. "It was one of those magical mystery tours," he said.