Wall Street finally found an excuse for a rally today, going on a buying binge after The White House signaled that President Bush will intervene in the labor dispute that has kept West Coast ports shut down for the last 10 days.
Just as the markets were closing, the president asked a federal court to reopen the ports, invoking powers granted by the Taft-Hartley act, a 50-year-old federal law that hasn't been used since 1978.
The White House announcement of the president's plan triggered a rally in retail stocks which quickly spread throughout the market. Wal-Mart Stores, the nation's biggest retailer was one of the leading gainers in both the Dow Jones industrial average and the Standard & Poors 500 stock index.
The Dow rose 78.65 points to 7,501.49. The S&P added 13.27 points to 798.55. The Nasdaq Stock Market composite index gained almost 10 points, closing at 1,129.22.
Today's gains ended a four-day losing streak that had trimmed more than 500 points off the Dow industrials.
The Dow was up as much as 200 points during the day, but retreated toward that close as the market once again demonstrated its propensity for over-reacting.
While merchants have been complaining that holiday sales could suffer because winter goods are backed up at the ports, retailers are facing far more immediate problems than potential late deliveries.
A new estimate issued today said retail sales for major chains last month had their slowest growth since last September, when aisles were emptied by the 9/11 attacks.
The looming war with Iraq is also viewed as a threat to holiday sales. Military action alone could keep shoppers away from the malls. In addition, fighting in Iraq is expected to produce a spike in prices of gasoline and heating oil, which would sop up money that consumers might otherwise spend on other things.
Investors looking for reasons to buy stocks probably found better ones in the quarterly report from PepsiCo Inc., which posted better than expected third quarter results. Pepsi's profits were a penny a share better than forecast and the company said its soft drink and snack sales are on their way to meeting their goal of 14 percent growth for the year.
Bank and credit card stocks also rallied today, but utility stocks were hammered by selling set off by Allegheny Energy Corp. of Hagerstown. Shares of the Maryland electric utility and energy trading company fell 50 percent today after Allegheny served notice that it could not meet credit standards required under energy trading contracts.