Stocks and Bonds Finish Quarter With Impressive Rally
Quarter's end brought a one-day bounce for stocks and bonds, leaving investors to debate whether they can hope for a more lasting rebound as the year's final quarter begins.</br></br>Amid heavy buying by large professional investors that wanted to avoid showing unspent cash on their books, the Dow Jones Industrial Average rose 123.47 points, or 1.21%, to 10336.95, the blue-chip index's biggest gain in almost four weeks.</br></br>With the latest economic news seeming to militate against a Federal Reserve interest-rate increase, investors also turned more optimistic about the market's future. Most major indexes gained, although technology stocks tended to lag behind. Treasury bonds posted sharp gains. The dollar, which has been regaining ground against the yen in recent days, pulled back a bit.</br></br>"It was end of the quarter, so there was a lot of portfolio rebalancing," said John Peluso, head of block trading at Lehman Brothers. Perhaps more significant, he said, was a rebound by bank and financial stocks that appeared to start before the brunt of the rebalancing process hit. "That gave a better tone to the tape and that's what gave legs to the market," Mr. Peluso said.</br></br>Financial stocks benefited from news that second-quarter economic growth was slower than initially believed and that unemployment claims were up last week. This added credence to the widening view that inflation is under control and that the Federal Reserve may leave interest rates alone at its policy meeting on Tuesday.