Market News: After the Bell



RTGAM






Investors weren't howling in pain for long, following Monday's dip in the U.S. stock market to 1997 lows.


On Tuesday, the Dow Jones industrial average closed at 7,350.94, up 236.16 points or 3.3 per cent - virtually erasing Monday's downturn and taking the index back to where it was in 2002, a five-year sprint in a single day. The broader S&P 500 closed at 773.14, up 29.81 points or 4 per cent.


Some of the most beaten-up stocks enjoyed the biggest gains, suggesting that investors have newfound optimism that death has been averted - curious given the rash of gloomy news, from falling home prices to crashing consumer confidence to downbeat remarks from the Federal Reserve chairman.


In his testimony at the Senate Banking Committee, Fed chairman said that he doesn't see an economic recovery until 2010, if government actions find traction - but investors honed in on his restated view that he does not believe that nationalizing weaker banks is necessary: "I don't see any reason to destroy the franchise value or to create the huge legal uncertainties of trying to formally nationalize a bank when that just isn't necessary," he said.


Bank of America Corp. and Citigroup Inc. - widely seen just last week as likely candidates for nationalization by the U.S. administration - surged 21 per cent and 21.5 per cent, respectively. The S&P 500 financials subindex rose 11.8 per cent, the biggest one-day jump since the end of January.


In other moves, General Motors Corp. rose 25.4 per cent and American Express Co. rose 12.1 per cent. Home Depot Inc. rose 10.5 per cent, even after investors learned that the S&P/Case-Shiller National Home Price index fell 18 per cent in the fourth quarter over last year, its worst decline in history.


Even JPMorgan Chase & Co., which became the latest financial firm to cut its quarterly dividend - to 5 cents (U.S.) from 38 cents - was rewarded, rising 7.7 per cent. Among the 30 members of the Dow, Microsoft Corp. was the only laggard, falling 0.2 per cent.


In Canada, the S&P/TSX composite index closed at 7,859.33, up 211.66 points or 2.8 per cent, on a strong rally by financials and energy stocks. The index fell more than 300 points on Monday.


Manulife Financial Corp. rose 7.7 per cent, Royal Bank of Canada rose 10.3 per cent and Bank of Montreal rose 6.1 per cent, as reporting season for the Big Banks kicks off on Wednesday with investors growing increasingly nervous about the safety of the banks' dividends.


Among energy stocks, Suncor Energy Inc. rose 6.8 per cent and Canadian Oil Sands Trust rose 5.2 per cent after the price of crude oil rose $1.52, to $39.96 a barrel. This was not a general commodities rally though. For its part, gold was crushed, falling more than $25 to below $970 an ounce, sending the shares of gold producers tumbling. Barrick Gold Corp. fell 12.2 per cent and Goldcorp Inc. fell 8.9 per cent.

Copyright 2001 The Globe and Mail