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North American stock market indexes staged a remarkable presidential election day rally on Tuesday after investors grew encouraged that, however disappointing the economy might be, the stock market's low point was reached last month.


The Dow Jones industrial average closed at 9625.28, up 305.45 points or 3.3 per cent. The index has now risen 17.7 per cent from its low point on Oct. 27. The broader S&P 500 closed at 1005.73, up 39.43 points or 4.1 per cent.


The gains were widespread, with 29 of the 30 stocks in the Dow ending the day higher. At the S&P 500, 91 per cent of the stocks rose.


Caterpillar Inc. rose 8.3 per cent, General Electric Co. rose 7.6 per cent, Chevron Corp. rose 6.1 per cent. Among financials, Bank of America Corp. rose 3.9 per cent and Citigroup Inc. rose 4.9 per cent.


Previously, the best election day rally was in 1984, when the Dow rose 1.2 per cent.


Two more high-profile commentators suggested that the stock market was a buying opportunity for patient investors, which may have emboldened those still sitting on the sidelines.


Teun Draaisma, a strategist at Morgan Stanley, argued that the European market was a "full house" of buying indicators, based on compelling valuations, good fundamentals, relatively low risk and capitulation among investors. This model flashed a "full house" sell signal when European stocks peaked in value last year - a fact that was not lost on a few commentators.


As well, John Bogle, the highly respected founder of the Vanguard Group, told Reuters that the sharp downturn in the U.S. stock market was overdone. "There was some water in the system, some hot air in the system, and we blew it out but I think we have overblown it," he said.


In Canada, the S&P/TSX composite index closed at 10,116.58, up 395.32 points or 4.1 per cent. The index has risen 18.5 per cent from its low point on Oct. 27.


Commodities producers led the way higher, helped out by a decline in the U.S. dollar that sent commodity prices up sharply. Crude oil surged to $70.53 (U.S.) a barrel, up $6.62. Gold rose to $757.30 an ounce, up $30.50. (Against the U.S. dollar, the Canadian dollar rose to 86.9 cents, up more than 2 cents.)


Among materials stocks, Teck Cominco Ltd. rose 12.5 per cent, Goldcorp Inc. rose 13.8 per cent and Potash Corp. of Saskatchewan Inc. rose 7.5 per cent. Among energy stocks, Suncor Energy Inc. rose 6.1 per cent, Talisman Energy Inc. rose 8.4 per cent and EnCana Corp. rose 3.9 per cent.

Copyright 2001 The Globe and Mail