Confident Market Registers 91-Point Gain
Traders Are Hopeful That Worst Is Over
NEW YORK--The battered stock market landed on its feet again yesterday, with prices sharply higher and the Dow Jones industrial average achieving its third-biggest gain ever despite weaknesses in the dollar and in some overseas stock exchanges.
Traders said there were increasing signs that confidence was returning to Wall Street in the aftermath of last week's historic plunge, although many cautioned the market could resume its downward trek.
"There are indications the worst is over," said Michael Metz, a vice president and technical analyst for Oppenheimer & Co. "I think the outlook is more promising."
In another shortened session, the Dow Jones average of 30 industrial stocks soared 91.51 to 1,938.33, a 5 percent increase. The closely watched index, which fell about 300 points last week and 157 on Monday, was up more than 110 points at one point yesterday.
Broader market measures also showed healthy gains. About four stocks rose in price for every one that fell on the New York Stock Exchange, with 1,395 up, 362 down and 242 unchanged.
The NYSE composite index rose 5.97 to 136.28, while the American Stock Exchange value index increased 8.29 to 242.30.
Standard & Poor's index of 400 industrials rose 14.30 to 279.79, and S&P's 500-stock composite index was up 11.49 to 24.77.
As measured by Wilshire Assocaites' index of more than 5000 stocks, the market gained $106.5 billion. That compared with a $500 billion loss on Oct. 19, when the Dow Jones industrial average plunged an unprecedented 508 points.
Volume was brisk by historic standards yesterday but off from recent sessions, with 258.14 million shares changing hands on the Big Board, the 13th-busiest day.
Brokers said the market, which got off to a strong start after the opening bell, shrugged off the dollar's weakness in foreign exchange markets and the stock price decline on some overseas markets, particularly Hong Kong and Japan.
"We're a little more independent from the world markets," said Dennis Jarrett, a technical analyst for Kidder, Peabody & Co.
Hugh Johnson, a senior vice president and market analyst for First Albany Corp., added that even though the dollar slipped, traders felt the currency eventually would stabilize. He said the United States and its major trading partners were showing signs of cooperating more to stabilize exchange rates.
"I think the stock market's picking up those cues and it's doing well," Johnson said.
A more stable dollar will also steady interest rates, a key factor affecting stock prices. Interest rates in the credit markets declined yesterday.
Traders said they were encouraged by the market's showing on Tuesday and Wednesday, in which the Dow Jones blue-chip index rose nearly 53 points. Investors have been slowly moving back into the market picking up stocks considered greatly undervalued, they said.
The market appeared to take in stride the fact that no final decision had been made by the close on whether the British government would go through with a public offering of its remaining stake in British Petroleum.
Securities firms bringing the stock to the marketplace stand to suffer losses in the deal because of the depressed condition of the markets.
This week, major exchanges are closing early to help curb the enormous amount of paperwork that built up from last week's record selloff.