Dow gains more than 495 points, sets one-day record

Posted: Thursday, March 16, 2000

NEW YORK (AP) - The Dow industrials soared as much as 450 points today as blue-chip stocks attracted money that is leaving the technology sector.

Technology stocks, which earlier fell steeply enough to drive the Nasdaq composite index into what many on Wall Street consider a ``correction,'' stabilized and were modestly lower at midafternoon.

In heavy afternoon trading on Wall Street, the Dow Jones industrial average was up 377.57, or 3.7 percent, at 10,508.98, extending a 320-point gain on Wednesday that represented its biggest surge in 17 months. If today's gain holds it would be the second largest single-point gain ever for the Dow.

In earlier trading, the Dow was up as much as 452 points.

The Nasdaq composite index was down 10.79 at 4,571.83, having clawed back from an earlier loss of 127 points. The Nasdaq had plunged 465 points over the past three sessions, bringing it more than 9 percent below its Friday record of 5,048.62. At its low point today, the index was down 11.8 percent.

Market watchers consider a loss of 10 percent a correction, which signifies a sudden reversal of a market trend but doesn't necessarily mark a long-term change. Many analysts believed the Nasdaq, which had risen 24 percent in the year to date, was overdue for a correction.

Broad market indicators were mostly higher today. The Standard & Poor's 500 index was up 43.12 at 1,435.26 and the Russell 2000 index of smaller companies rose 0.41 to 559.28.

Analysts said investors were snapping up shares of companies that have been driven well below their previous highs in recent months. Investors' willingness to dump blue-chip stocks in favor of technology stocks pushed the Dow into a correction in mid-February, and the index has struggled until this week.

Today, a wide range of stocks led the Dow higher. American Express rose 11 7/16 to 144 5/16, Johnson & Johnson rose 3 to 80 1/16, and 3M rose 4 15/16 to 87 7/16.

Also, General Electric rose 4 to 137 and J.P. Morgan gained 8 to 124. Many of those shares have been beaten down in recent weeks as investors poured money into technology stocks, and are now enticing investors as relative bargains.

Meanwhile, investors sold Nasdaq stocks that have performed best in the year to date. Dell fell 1 3/16 to 52 and Cisco Systems fell to 128.

``A lot of these high-growth stocks had gotten to such extreme valuations,'' said Matt Finn, chief investment officer of the growth and income group at Evergreen Funds in Boston. ``They were due to come down.''

Blue-chip stocks rose even after the Labor Department's Producer Price Index showed that wholesale prices surged 1 percent in February, the largest gain in nearly 10 years, as gasoline, home heating oil and other energy costs rose.

Inflation figures, including the Consumer Price Index due for release on Friday, are sure to be closely watched by the Federal Reserve as it weighs whether still higher interest rates are needed to cool the economy. In a continuing effort to keep inflation at bay, the Fed has raised rates four times since last June, and it meets again Tuesday, when investors are expecting a fifth rate hike.

Still, investors were heartened by the fact that the "core'' rate of inflation at the wholesale level, which excludes the volatile energy and food categories, matched expectations with a 0.3 percent gain in today's report.

``The core rate was in line with what we expected,'' said Finn. ``The Fed is on its way to taking the edge off inflation, and it's looking like they aren't going to have to be excessive to do it.''

The bond market improved modestly, lending support to stocks. The yield on the 30-year Treasury bond fell to 6.04 percent from 6.07 percent late Wednesday.

Advancing issues outnumbered decliners by a 3-to-1 margin on the New York Stock Exchange, where volume came to 1.03 billion shares at midafternoon, well ahead of Wednesday's heavy pace.

Volatility was magnified because Friday is a ``triple-witching'' session, a once-a-quarter event when contracts on stock options, index options, and index futures all expire. Those expirations generally cause increased volatility on Wall Street.

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