Kickoff to the Fourth Quarter Yields a Record Close for the Dow
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Tuesday, October 2, 2007
NEW YORK, Oct. 1 -- Wall Street began the fourth quarter with a huge rally Monday, sending the Dow Jones industrial average to a record close. Stocks were buoyed by a growing belief that the worst of the credit crisis has passed.
The Dow rose 191.92, or 1.38 percent, to 14,087.55, surpassing its closing record of 14,000.41 set in mid-July. The blue chips rose as high as 14,115.51, eclipsing their previous trading high of 14,021.95 set July 17. The Standard & Poor's 500-stock index rose 20.29, or 1.33 percent, to 1547.04. The Nasdaq composite index rose 39.49, or 1.46 percent, to 2740.99.
Although the beginning of the new quarter was an incentive for institutional investors to buy, they also seemed motivated by a sense that banks and other financial companies had generally weathered the recent credit market upheaval. Both Citigroup and Switzerland's UBS issued third-quarter profit warnings but indicated that the current period might bring a return to normal earnings levels.
Meanwhile, investors were optimistic that new economic data might nudge the Federal Reserve toward another interest rate cut at its Oct. 30-31 meeting. The Institute for Supply Management said the manufacturing sector in September grew at the slowest pace in six months.
Enthusiasm about acquisition activity picked up after Nokia announced an $8.1 billion offer to buy navigation-software maker Navteq. That was seen as a signal that firms were feeling comfortable about making big moves despite market turbulence.
Financial stocks slumped in the third quarter as uncertainty grew about the extent of losses from the credit and subprime mortgage turmoil, but comments from Citi chief executive Charles Prince put investors more at ease about the fourth quarter. Because analysts think financials lead to a broader Wall Street advance, a rally in bank and brokerage stocks was greeted with enthusiasm. Homebuilding stocks, another group that has been hit hard in recent weeks, spiked after several big firms in the sector were upgraded.
Movers
Citigroup rose $1.05, to $47.72.
Countrywide Financial gained 95 cents, to $19.96.
Pulte Homes was up $1.18, at $14.79.
