Dow zooms 235 points, scores best weekly gain in 20 years

Nasdaq, S&P 500 also rise amid upbeat war news

March 22, 2003|By William Patalon III | William Patalon III,SUN STAFF

The Dow Jones industrial average soared more than 235 points yesterday, capping its best week in more than two decades and pushing the index of 30 blue-chip companies back into positive territory for the year.

"This is probably a rally without precedent in recent memory," said Angel Mata, senior vice president for listed equity trading at Legg Mason Inc. in Baltimore.

The Dow gained 235.02 points, or 2.84 percent, to close at 8,521.97, rising 8.4 percent for the week, its best showing since the five-day stretch that ended Oct. 8, 1982. The Dow has risen for eight straight days, advancing 13 percent in that time. Because of that run, it is up 6 percent for the year.

The Standard & Poor's 500, a broader measure of the stock market, gained 20.06 points yesterday, or 2.3 percent, to finish at 895.90. It climbed 8 percent this week.

That index also has advanced for eight straight days - the first time it has done so since June 1997 - gaining 12 percent during that period. It is up 5 percent for the year.

The technology-filled Nasdaq composite index rose 18.56 points, or 1.32 percent, to close yesterday at 1,421.33. It rose 6 percent during the week.

Despite a decline Wednesday, the Nasdaq is up 8 percent for the year and is within 40 points of its high for the year.

The eight-day rally has lifted the Dow 13.3 percent and the S&P 500 11.9 percent.

Investors said much of this recent surge has essentially been a relief rally related to the situation in Iraq.

The initial gains were registered after it became clear that the United States intended to attack, ending months of uncertainty and wrangling at the United Nations. The rally gained momentum when nothing unexpected surfaced in the war's initial stages, investors said.

"The uncertainty [had been] overwhelming," said William E. Lauer, chief investment officer of Chevy Chase Trust in Bethesda. Investors "knew we were going to war, but not when. Now, we're also able to see the first phase of the war is going really, really well. It's also beginning to look a lot like there's going to be a good chance for a [fairly quick] U.S. victory."

When stocks began to move higher, speculators who had predicted a decline and sold shares short had to cover their bets, which added intensity to the initial rally, said Mata of Legg Mason.

It's likely that traders betting on further increases jumped in, followed by longer-term investors who had been on the sidelines awaiting some sign of a bull market advance, Mata said.

Those three groups of buyers combined to fuel the strong market advance of the past eight trading days, he said.

Stocks aren't the only market that has reacted favorably to the developments abroad, investors said.

A strike by oil workers in Venezuela, a big buildup of fuel reserves by the U.S. government and worries that problems in the Middle East could interrupt fuel supplies had pushed crude oil prices from a low of about $24 a barrel last year to nearly $40 recently.

In the past week, crude prices declined from about $38 a barrel to just less than $27 a barrel. Kevin McCreadie, chief investment officer for Mercantile Bankshares Corp., said the benefits of that decline will take about two months to flow through the U.S. economy if they hold but should help corporate profits globally and, as a result, stock prices.

"That's close to a 30 percent decline in price," McCreadie said.

Analysts said clear sailing isn't necessarily ahead for stocks. They said share prices aren't likely to keep climbing at the recent blistering pace and that any significant bad news could cause share prices to fall.

Unusually heavy U.S. casualties or a drawn-out campaign in Iraq could cause share prices to drop precipitously.

"The easy money has been made," Mata said. "Now comes the hard part."

Elsewhere on the broad market, the Russell 2000 index, a benchmark of small-cap stocks, rose 5.74, or 1.6 percent, to 376.23 and the Wilshire 5000 total market index rose 178.78, or 2.2 percent, to 8,463.37.

Based on the Wilshire's change, the total value of U.S. stocks rose by $214.54 billion yesterday.

The Sun-Bloomberg index of the top stocks in Maryland gained 3.48, or 1.9 percent, to 187.50. Igen International Inc. rose $3.48 to $37.28 and Marriott International Inc.'s Class A shares gained $2.14 to $34.88.

Advancing issues outnumbered declining ones about 5-to-2 on the New York Stock Exchange. Volume was 1.88 billion shares, up from 1.45 billion traded Thursday.

General Electric Co., the world's second-most-valuable company after Microsoft Corp. climbed $1.15 to $28. Microsoft added 27 cents, or 1 percent, to $26.52.

Pfizer Inc., the world's biggest drug maker, added $1.16 to $31.96.

Walt Disney Co., the second-largest U.S. media company and owner of the ABC network, gained $1.60 to $18.74. Viacom Inc., owner of CBS television, rose 77 cents to $41.61.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.