NEW YORK -- Months of tension in the financial markets ended yesterday morning at the New York Stock Exchange, first with a moment of silence and then with a sustained roar, as traders paused for one minute to honor those fighting in the Middle East and then frantically bid for stocks.
The Dow Jones industrial average soared 114.60 points, or 4.57 percent -- the second largest gain in Wall Street history -- to close at 2,623.51 on extraordinary volume of 319 million shares.
But news of missile attacks on Israel wiped out opening gains of more than 300 points on the Tokyo market today. The 225-issue Nikkei stock average soared in the first 10 minutes of trading then plunged on first word of the missile attack. The index recovered to open afternoon trading at 23,695.76, up 248.95 points, or 1.06 percent, from Thursday's close, which was the Nikkei's 10th-largest increase ever.
In New York yesterday, most of the activity occurred in the first hour of trading. By the afternoon, exhausted floor traders and specialists were sprawled on chairs or listing against the NYSE's old, wooden trading booths.
"I can't remember when it was last like this," said Lawrence Citarelli Jr., a trader with Spear Leeds & Kellog, as he sipped his breakfast coffee at 2:30 p.m. outside the exchange's back door.
The stage was set early for the NYSE's sharp rally as financial markets around the world surged with reports on the one-sided fighting against Iraq Wednesday night.
Brokerage firms called in employees early and the stock exchange announced it was prepared to handle record volumes of activity.
Precisely at 9:30 a.m. Stock Exchange Chairman William H. Donaldson quickly rapped the opening bell three times and conversation and movement on the normally raucous exchange ceased for a pre-announced minute of silent prayer.
At 9:31, Mr. Donaldson rang the bell again to sustained applause, and stock prices instantly climbed.
At 9:32, the Dow was up 1.42 points, five minutes later more than 20 points, within 15 minutes almost 65 points, and by 10 a.m. almost 100 points.
Volume in the opening minutes was intense, with 61 million shares traded in the first half hour.
"You had a market where everyone was prepared for the worst and it didn't happen," said Michael Metz, a market analyst with Oppenheimer & Co. "People had 14 hours to assess the news and they realized the case for Armageddon in the Middle East wasn't justified."
Advancing issues exceeded declining ones by a 5-to-1 margin as pessimism seemed to evaporate. Prices took off for airlines, which are particularly sensitive to Middle East developments because of their heavy expenditures on fuel. UAL gained 9, to 124; AMR 4 3/8 , to 51 1/2 ; Delta Air Lines 4 3/4 , to 65 5/8 , Southwest Airlines 1 3/4 , to 20 1/2 ; and Boeing, an aircraft manufacturer, 2 5/8 , to 48.
Other big stocks also rose, including Philip Morris, up 2 3/8 , to 52 1/8 ; General Motors 1 3/4 , to 33 7/8 ; and International Business Machines 6 5/8 , to 115 3/4 . Conversely, energy and precious-metals issues tanked as high fuel prices and investment strategies structured for disaster lost luster in the face of good news.
Only a 186.84-point gain on Oct. 21, 1987 in the aftermath of the stock market crash exceeded yesterday's rally. Yesterday's volume was the eighth-highest in history.
Despite the sudden rush of optimism, concern remains over whether a night's worth of positive military developments can reverse months of unsettling economic developments.
"The market has made its turn, but it won't sustain this event," said Mr. Metz. "New concerns about the economy will surface and put a lid on this. The question is where is the lid [for the market]. I think it is close to here."
Added Sandor Cseh, a portfolio manager with Cseh International & Associates, said, "If you get any piece of bad news, even if its a rumor, you might see a pull back. Right now, people are so optimistic about the outcome, they have become, if anything, too optimistic."
Others, however, suggested that the events of the first 24 hours of the war were more profound, with powerful long-range economic implications.
"We should have much lower oil prices than expected and lower inflation, and that should lead to lower interest rates and, eventually, a strong economy," said Paul Lesutis, executive vice president of Provident Capital Management.