MARKETS RALLY; INVESTORS LEAP BACK IN AFTER LABOR-COST REPORT.Byline: Eileen Glanton Associated Press A benign report on labor costs sparked a broad-based rally on Wall Street on Thursday as investors who had abandoned stocks jumped back into the market, believing once again that inflation is under control. The Dow Jones industrial average Dow Jones Industrial Average The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. rose 227.64 to 10,622.53, extending Wednesday's 92-point gain. It was the Dow's biggest advance since it rose 235.24 Sept. 3. The Standard & Poor's 500 rose 45.73 to 1,342.44, and the Nasdaq composite index Nasdaq Composite Index An index that indicates price movements of securities in the over-the-counter market. It includes all domestic common stocks in the Nasdaq System (approximately 5,000 stocks) and is weighted according to the market value of each listed rose 72.70 to 2,875.22. Still, some analysts believed the wave of buying was an extreme reaction to fairly modest government data. ``The market was looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. an excuse to go up,'' said Bernie Schaeffer, chairman of Schaeffer's Investment Research Inc. In recent weeks, the market has been dominated by a debate over whether the Federal Reserve will raise interest rates for the third time this year in its continuing effort to ward off inflation. Traders said the employment cost index might not deter the Fed from implementing another rate hike when its policy-writing Open Market Committee meets Nov. 16, but they believed the next increase could be the last for a while. ``The issue is not closed, of course,'' said Michael Moran, chief economist at Daiwa Securities America, noting that the Fed will also carefully monitor next week's employment report for October. ``But inflation pressures are not problematic at this time.'' Bond prices rose for a second straight session, pushing the yield on the 30-year Treasury bond down to 6.25 percent from 6.33 percent late Wednesday. Stocks drew some additional support from the retreat in bond yields, which earlier this month rose high enough to lure some investors away from stocks. The promise of stabilizing interest rates boosted bank stocks for a second straight session. Citigroup rose 3 to 54-1/8, and American Express soared 10-3/8 to 161. Chase Manhattan rose 5 13/16 to 88 9/16. Banks are especially sensitive to rising rates because higher rates can discourage customers from borrowing money, cutting into lending volume. Also, higher rates can reduce the value of a financial firm's fixed holdings. Investors focused on the employment cost numbers to the exclusion of a strong report on the nation's gross domestic product. The government said the U.S. economy expanded at an annual rate of 4.8 percent from July through September, the fastest pace this year. On a less optimistic day, the GDP GDP (guanosine diphosphate): see guanine. report could have prompted selling, analysts said. But the employment cost index prevailed in shaping investor sentiment, calming an uneasy market. ``There seems to be a sense that whatever the Fed does, once we get it out of the way, the market can move higher,'' Schaeffer said. On the Nasdaq, Amazon.com fell 4 15/16 to 71. The online retailer said late Wednesday that while its third-quarter results topped expectations, losses more than tripled from a year ago as the company spent heavily to expand its online offerings. MCI (1) (Media Control Interface) A high-level programming interface from Microsoft and IBM for controlling multimedia devices. It provides commands and functions to open, play and close the device. (2) (Microwave Communications Inc. WorldCom rose 6 1/16 to 83-5/8 after saying third-quarter operating profits nearly tripled from the same period in 1998. The telecommunications company earned $1.09 billion, or 55 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , beating analysts' expectations of 54 cents per share. Advancing issues outnumbered decliners by a 12-to-5 margin on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. . NYSE NYSE See: New York Stock Exchange volume totaled 1.12 billion shares, compared with 894.40 million in the previous session. The Russell 2000 index Russell 2000 Index An index measuring the performance of the 2,000 smallest companies in the Russell 3000 Index, which is made up of 3,000 of the biggest U.S. stocks. The Russell 2000 serves as a benchmark for small-cap stocks in the United States. of smaller companies rose 6.04 to 422.81. CAPTION(S): Photo PHOTO (color) Traders work the floor of the New York Stock Exchange on Thursday, where stocks soared after the Labor Department The Department of Labor (DOL) administers federal labor laws for the Executive Branch of the federal government. Its mission is "to foster, promote, and develop the welfare of the wage earners of the United States, to improve their working report. David Karp/Associated Press |
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