WALL STREET staged a dramatic comeback in late trade yesterday with stocks in the Dow Jones index soaring by almost 500 points, finally breaking a miserable nine-week downward trend.
It was the second-largest points gain for the Dow in history, with record buying. The Dow rocketed passed the symbolic 8,000- point mark and closed at 8191.29, up 488.95 points or 6.3 per cent.
Rumours that central banks on both sides of the Atlantic were poised to cut interest rates to stem the stock market carnage had helped to fuel wild swings in all key financial centres earlier in the day, while stronger-than-expected earnings reports, notably from Reebok and DuPont, clearly contributed to Wall Street's turnaround.
Word came from Capitol Hill of an agreement on passing legislation to clamp down on corporate malfeasance. Investors also welcomed the arrest of the founder of Adelphia Commmunications.
While the turnaround was undoubtedly dramatic, the new gains still pale besides the losses of previous days and weeks. The Dow Jones lost 800 points in the previous four sessions alone. Nor was Wall Street daring to predict whether the return of buyers signalled the start of an enduring rally or only a one-day snap-back that will once again be erased.
"I'm a little sceptical," said Todd Clark, head of listed equity trading at Wells Fargo Securities. "Every time we've had one of these violent rallies, it's been a classic bear market bounce with no follow-through." It was a neck-jarring day, with the Dow dropping 170 points in early trading.
Financial stocks also helped fuel the rally. After suffering on Monday on reports of possible culpability in the accounting fraud at Enron, JP Morgan Chase recovered dramatically after its chief executive William Harrison insisted the US banking giant had acted "properly and with integrity" in its dealings with the energy trader. …