US Stocks Post Unlikely Rise; Asset Swaps, Short Covers
01 Nov 16:32
By Robert O'Brien
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--U.S. equities overcame another spate of dismal reports
on economic conditions with nary a hiccup, as market averages traded sharply
higher on the day.
The makers of semiconductors and other types of communications equipment
paced the rally. Advanced Micro Devices climbed $1.66, or 17%, to reach $11.50,
while Xilinx increased 2.73, or 9%, to 33.15 on the Nasdaq Stock Market, and
Conexant Systems surged 1.09, or 11%, to 11.24, also on Nasdaq.
Shares of optical components maker JDS Uniphase rose 43 cents, or 5.4%, to
8.42, Qualcomm increased 2.51, or 5.1%, to 51.63, and ONI Systems added 36
cents, or 7.4%, to 5.25, all on Nasdaq.
Meanwhile, a number of manufacturers rose sharply on the day, with Whirlpool
ahead 1.78, or 3%, to 60.80, Ball gaining 2.28, or 3.7%, to 63.82, and General
Dynamics moving up 2.40, or 2.9%, to 84.
The improvement in equity prices seemed to defy some logic, as the lion's
share of the session's progress came after the release of data showing the
manufacturing sector, reflecting the sluggish of the overall economy,
deteriorated even more precipitously in October than economists had
anticipated.
Yet, the Dow Jones Industrial Average finished the day 188.76 points higher,
an improvement of 2.08%, to 9263.90.
Traders said they suspected that the equities market benefitted from the
bulge in prices for long-maturity Treasury bonds, following the federal
government's decision Wednesday to end its sale of 30-year bonds. The so-called
long bond, which tacked on more than five points in Wednesday's trading, added
another point in Thursday's market. The gains in price may have convinced some
fixed-income investors to take profits, and shift those proceeds to the
equities market.
"I suspect some investors have used the run-up in bondsas an opportunity to
undertake some asset allocations, in which they're selling their bonds and
buying equities," Tim Heekin, director of trading at Thomas Weisel Partners,
said Thursday. "That's the underpinning of this move up."
Once stock prices, which traded lower in the initial reaction to Thursday's
economic data, began to reverse, it forced short-sellers - investors who bet on
a decline in stock prices - to cover their short positions by buying equities,
which only intensified the bulge in prices.
In fact, though there were some accommodating fundamental developments, the
kinds of stocks, especially in the technology sector, that posted big gains
Thursday are the types that have had big moves recently, and would be
attractive to the investors that place short bets.
Whatever the rationale, the results proved to be compelling. The Nasdaq
Composite Index, benefitting from the rally in communications components,
advanced 56.10 points, or 3.32%, to 1746.30.
(MORE) DOW JONES NEWS 11-01-01
04:32 PM
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=DJ US Late Market Comment -2: NYSE Volume At 1.24B Shares
01 Nov 16:56
On the New York Stock Exchange, there were 2,229 issues advancing, 877
declining and 187 unchanged.
NYSE volume totaled 1,242,421,330 shares, compared with 1,307,953,710
Wednesday.
The NYSE Composite Index was 555.96, up 9.62. The average price per share
rose 56 cents.
(MORE) DOW JONES NEWS 11-01-01
04:56 PM |
