Optimism on lower rates boosts blue-chip stocks
Optimism that interest rates might soon be lowered sent blue chip stocks soaring yesterday, while earnings worries again dogged the tech sector.
Financial stocks surged on speculation that the Federal Reserve would cut rates more quickly than expected. But tech stocks fell, unable to overcome Wall Street's doubts about their profitability in the slowing economy.
The Dow Jones industrial average closed up 210.46 to 10,645.42, a rise of 2 per cent. The Standard & Poor's 500 index rose 10.59, or 0.8 per cent, to 1,322.74.
But the rally didn't extend to the Nasdaq composite index, which fell 28.75, or 1.8 per cent, to 2,624.52 despite advancing in early trading.
Blue chips' strength today appeared predicated on hopes the Fed would act more aggressively than expected at its regular meeting tomorrow, urged on by recent economic data showing growth is slowing.
Financial institutions, which would benefit from an interest rate cut, moved higher. Shares of banker J.P. Morgan rose $6.63 to $166.63, as did American Express, up $2.13 at $56.75.