NEW YORK (AP) — Wall Street was enjoying an Election Day rally Tuesday, surging as investors brushed off weak economic data and looked forward to putting the uncertainty of the presidential voting behind them. The Dow Jones industrial average soared about 300 points, and the other major indexes rose well over 2 percent.
The Commerce Department said factory orders fell 2.5 percent in September from August levels, much worse than the 0.7 percent drop analysts predicted. But investors generally expect data from September, and even October, to be extremely weak, as credit markets began to seize up in mid-September, and analysts say some of the bad news may already be factored into stock prices.
Matt King, chief investment officer of Oakland, Calif.-based Bell Investment Advisors, said investors are moving into the market in anticipation of the economy improving.
“It’s pretty typical of how bear markets end,” said Matt King, chief investment officer of Oakland, Calif.-based Bell Investment Advisors. “The stock market recovers well ahead of the economy.”
Investors are eager to have the election over with. Analysts predict stocks are headed for a recovery no matter who is elected, as the policies of both John McCain and Barack Obama will likely be guided by the weak economy and the recent flood of government support designed to keep the global financial system from collapsing.
Still, Wall Street has had a better tone over the past week. Last week saw the Dow rise 11.3 percent, its best weekly gain in 34 years. Although many analysts predict the market will see more volatility as it recovers from devastating selling during much of October, many also believe that the worst of the losses are over.
In late morning trading, the Dow rose 295.97, or 3.18 percent, to 9,615.80.
The broader indexes also rose. The Standard & Poor’s 500 index gained 36.84, or 3.81 percent, to 1,003.14, while the Nasdaq composite index rose 50.82, or 2.94 percent, to 1,777.15.
The Russell 2000 index of smaller companies rose 11.58, or 2.15 percent, to 550.08.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to a light 1.02 billion.
Investors have overlooked a spate of bad economic data recently, including a report Monday from the Institute for Supply Management that revealed the worst monthly contraction in manufacturing activity. Additionally, automakers reported the lowest level of U.S. car sales in more than 17 years. The market closed narrowly mixed in light trading Monday, with the Dow making just a single-digit point decline — something that has become unheard of in recent months in the midst of daily several hundred point swings.
The key bank-to-bank lending rate known as Libor fell to 2.71 percent from Monday’s rate of 2.86 percent for three-month dollar loans. A fall in the London Interbank Offered Rate indicates that banks are more willing to lend to one another.
Investors’ demand for short-term government debt remained high, however, a sign that they are still cautious. The yield on the three-month Treasury bill, seen as one of the safest assets around, rose only slightly to 0.49 percent from 0.47 percent Monday. A low yield indicates high demand.
The yield on the benchmark 10-year Treasury note fell to 3.90 percent from 3.92 percent late Monday.
Early Tuesday, the dollar fell against most other major currencies, while gold prices rose.
Light, sweet crude rose $4.04 to $67.95 a barrel on the New York Mercantile Exchange.
In Asian trading, Japan’s Nikkei index soared 6.27 percent, Hong Kong’s Hang Seng Index edged up 0.28 percent. Britain’s FTSE 100 rose 1.87 percent, Germany’s DAX index rose 1.97 percent, and France’s CAC-40 advanced 2.33 percent.
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Stocks rally ahead of US election – 11 a.m.
November 4, 2008