U.S. Stocks Rally As Markets Rise In Asia, Europe

U.S. stocks rallied yesterday following a recovery in Asian and European markets. The surge in all major U.S. indicators occurred despite disappointing manufacturing figures and was stronger than the 50-point bounce-back Feb. 28, a day after the Dow Jones industrial average shed 416 points.

The Dow jumped 157.18, or 1.3 percent, to close at 12,207.59. The tech-heavy Nasdaq composite index rose 44.46 points, or 1.9 percent, to 2385.14. And the broader Standard & Poor's 500-stock index rose 21.29 points, or 1.6 percent, to 1395.41.

Despite the gains, the three market indicators were still down for the year.

"It was the first nice rally in the wake of last week's air pocket," said Stephen Stanley, chief economist at RBS Greenwich Capital Markets. "People are starting to feel increasingly comfortable that the damage is going to be contained."

Stanley and others cautioned that there was still room for another downturn, with lingering concerns about subprime mortgages in the United States and the availability of credit worldwide. "I wouldn't say we're out of the woods yet," he said.

U.S. stocks, buoyed by gains in overseas markets, opened higher and remained on solid footing throughout the day. After a sharp sell-off Monday, Hong Kong's Hang Seng index rose 2.1 percent. In Japan, where Treasury Secretary Henry M. Paulson said the global economy was as strong as he had ever seen, the Nikkei gained 1.2 percent.

European markets were higher, too. Britain's FTSE 100 rose 1.3 percent, France's CAC 40 was up 1 percent, as was Germany's DAX index.

The markets largely shrugged off U.S. government reports indicating worker productivity was down, labor costs were up, and that factory orders fell almost 5.6 percent in January, the largest monthly decline since July 2000.

The Labor Department said labor costs increased by 6.6. percent in the fourth quarter of 2006, not 1.7 percent as originally estimated. The agency also revised worker productivity numbers; it grew at an annualized rate of 1.6 percent, not 3 percent. Productivity measures the value of worker output per hour; when it falls, it costs businesses more to produce the same amount of goods and services.

Meanwhile, the yen fell against all major currencies. Analysts have been monitoring the yen, whose recent ascent suggested that a major source of capital in the global market may be drying up. This would happen if investors, who have been borrowing the low-yielding yen to buy higher-returning assets elsewhere, reversed their bets to get out of risky positions. The yen traded at 116.67 against the dollar yesterday, compared with 116.37 the day before.

The U.S. rally was broad. On the New York Stock Exchange, advancing issues outnumbered declining issues by 5 to 1. Market movers included IBM, General Motors, Alcoa and American Express, all up more than 2 percent.

Some financial firms that had taken a beating on concerns about subprime mortgages also rose. Countrywide Financial, the nation's biggest mortgage lender, was up $1.65, or 4.69 percent, to close at $36.85.

"People went after the stocks that have been hammered," said Andrew Brooks, the head equity trader at T. Rowe Price.

Movers

Advanced Micro Devices rose 14 cents, to $14.09. The chipmaker said it would probably miss its first-quarter sales forecast.

Citigroup rose $1.33, to $50.58, after offering $10.8 billion to buy Nikko Cordial, a Japanese investment bank.