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Dow soars at Nasdaq's expense, bonds rise

NEW YORK: The Dow Jones industrial average chalked up its fourth-biggest point rise on Wednesday, as investors moved out of high-flying technology shares to snap up bargains among "old economy" stocks.

Bonds rose, and the dollar edged up after the Bank of Japan intervened to curb the strong yen.

Oil prices fell after Saudi Arabia, the world's largest oil exporter, said it favoured boosting supplies, beginning April 1.

Analysts said the image of the Nasdaq composite index as the only place to invest for monster gains remained bruised after a massive selloff on Tuesday in biotechnology stocks the very sector that had helped fuel the tech-stacked index's rapid ascent.

"People don't see the Nasdaq as being a sure bet, particularly the biotechs," said Rick Meckler, senior managing director at Liberty View in Jersey City, N.J.

"But people are still interested in investing. They are just rotating into the next area and the area they have picked up now is the old-economy stocks, which are beaten down."

The blue-chip rally, which included interest-rate-sensitive stocks such as banks and retailers, signalled confidence ahead of a report on inflation at the wholesale level, due out on Thursday, analysts said.

The Dow jumped 320.17 points, or 3.26 percent, to 10,131.41 its first close above the 10,000 mark in four sessions. The gain of over 320 was the Dow's biggest one-day rise, in points, in 17 months.

Volume of about 1.30 billion shares on the New York Stock Exchange made it the Big Board's third-busiest day ever.

The broader Standard & Poor's 500 Index climbed 32.99 points, or 2.43 percent, to 1,392.14.

Among the leaders of the Dow pack were financial services firms, with JP Morgan & Co. up 6-5/8 at 117-11/16 and American Express Co. up 4-1/2 at 132-7/8.

The Nasdaq composite index, meanwhile, lost ground for its third straight session, off 124.01 points, or 2.63 percent, at 4,582.62, a day after it suffered its second-worst point decline ever amid the biotechnology sector selloff.

The Nasdaq has shed 465 points in three days, putting the index 9.23 percent off its closing high of 5,048.62 struck on Friday, nearly meeting the 10 percent drop that meets the definition of a correction on Wall Street.

Doing the damage on Wednesday to the Nasdaq were the Internet companies, with theStreet.com's Internet index off 6.13 percent.

Internet media company Yahoo Inc. fell 10-1/4 to 158-1/2 in heavy trading after a report that it was in talks with Internet auctioneer eBay Inc. about a possible merger. eBay shares were down 21-31/64 to 189-33/64.

But the biotechnology sector, which went into pullback mode on Tuesday after calls for free access to information on the human genetic blueprint that biotechs plan to capitalise on, recovered a bit from its slump. The Nasdaq's Biotech Index was up 3.03 percent.

"There is a flight to quality," said Charles Payne, head analyst at Wall Street Strategies. "As we head toward (a Federal Reserve rate-setting committee meeting), there is always a rotation into the blue chips. There is perceived value there."

Wall Street was bracing for Thursday's release of the Producer Price Index, which the Fed is likely to consider when it decides whether to raise interest rates at its meeting next week. The Fed has increased interest rates four times since last June.

"They're taking down all the ones that ran up so fast," said Paul Cox, manager of the Commerce Mid-Cap Fund at Commerce Bank in St. Louis, Mo., of the Nasdaq's pullback. "This is a good, solid correction. It's taking out a lot of money. To say a correction was overdue is an understatement."

The benchmark 30-year US Treasury bond was up 8/32, or $2.50 on each $1,000 of face value. The yield, which moves in the opposite direction, fell to 6.07 percent from on Tuesday's close of 6.09 percent.

The dollar edged up to 96.72 cents per euro and 105.64 yen in late trading from 96.80 cents per euro and 105.20 yen.

On the New York Mercantile Exchange, crude oil for April delivery fell 97 cents to settle at $30.72 a barrel.

The trigger for the price drop was a report late on Tuesday that Saudi Arabia would support an increase in oil output, effective April 1, to meet the expected demand from refiners for "lots" more oil. Curbs in oil output, approved by major oil producers last year, are set to expire at the end of March.

Overseas, London's FTSE 100 index fell 40.1 points, or 0.62 percent, to close at 6,447.0. In Tokyo, the Nikkei average of 225 leading shares closed down 63.24 points or 0.33 percent at 19,078.60. -Reuters