Wall Street finally broke its six week losing streak today, shrugging off reports that retail sales are falling and consumer confidence has plunged to a nine-year low.
The official excuses for today's rally were General Electric's report that its third quarter profits grew 25 percent to $4.1 billion and a projection that business is getting better at International Business Machines Corp.
Both those big blue chip stocks have lost close to half their value this year prompting many investors to proclaim them bargains. Today those true believers we joined by buyers who lifted both stocks and with them the Dow Jones industrial average.
IBM stock jumped more than 10 percent--its biggest gain in more than a year.
By the close, the major indexes were all up around 4 percent. The Dow closed up 316 points at 7,850.29. The Standard and Poor's 500 stock index rose 31 to 835.32 and the Nasdaq Stock Market composite index soared 47 to 1,210.48.
Over the last two days, the Dow gained a little over 8 percent, its biggest two-day advance of the year, to end the week with a gain of 322 points, or 4.2 percent. For the week, the S&P was up 35 points or 4.3 percent; the Nasdaq ended the week up 71 points or 6 percent.
Even without today's big gains the indexes were ahead for the week and with them the markets were on their way to their best week since early August--just before the six-week slide began.
Investors have been ripe for a rally and today they seemed determined to have one even if there were plenty of excuses for the market to move in the opposite direction.
Today's retail sales report from the Commerce Department confirmed what the national retail chains reported yesterday--consumers are cutting back.
Total retail sales fell last month for the first time since May. They were down 1.2 percent from the previous month. Most of that was cars. Sales slowed when the Detroit car makers dropped zero percent financing, but now they have reinstated those deals and volume is picking up again.
Factoring out cars, sales of other general merchandise were down 0.1 percent for the month and department store sales were off 0.6 percent.
Reinforcing concerns that consumers--who have been keeping the economy growing--are tightening their belts was the University of Michigan's consumer sentiment index.
It plunged from 86.1 last month to 80.4 in October, its lowest level since September of 1993. The drop of almost 6 points was much more dramatic than the downturn of less than a point that most economists had expected.
What consumers say about their confidence is not as important as what they do when the go shopping, economists like to point out. Today, however, both their words and their wallets were warning that the spending spree may be over.
That message bodes badly for the economy but is no surprise. Economists have been predicting that the prospects of war with Iraq and higher energy prices will slow consumer spending this fall.
Wall Street's willingness today to ignore what consumers are saying and doing made some analysts anxious about counting on the market to hold the gains scored over the last two days.
The markets have been hyperactive lately, and investors have seen big gains evaporate almost as quickly as they were made.
But still this is the Dow's best two-day rally of the year and that alone was enough to make investors happy--no matter what happens next.