Dow soars 255 points

Wall Street revelled in stunning gains again today as the Dow Jones industrials surged more than 250 points, giving the blue chips their first three-day, triple-digit winning streak in 17 months.

In three sessions, the Dow has netted about 667 points.

But analysts remained guarded, refusing to say that the market had finally bottomed out and was on a new upward path, insisting that investors remained nervous about committing to stocks.

“There is still a very high level of anxiety on both sides,” said Ned Riley, chief investment strategist at State Street Global Advisers. “There is anxiety that people are going to miss something spectacular on the upside, and there is anxiety that they are going to be caught in a vicious vortex of a bear market.”

The Dow closed up 255.87, or 3%, at 8,712.02. Combined with triple-digit gains in the previous two sessions, the Dow has climbed about 667 in three days. The Dow had not seen three consecutive triple-digit wins since netting 558 points in the three sessions that ended March 27, 2001.

The broader market also finished higher. The Standard & Poor’s 500 index rose 28.67, or 3.3%, to 905.44, following a two-day advance of 42.17.

The Nasdaq composite index advanced 35.61, or 2.8%, to 1,316.51, following a two-day gain of 74.89.

Wall Street welcomed the gains following last week’s string of weaker-than-expected economic data, which raised fears that the US economy was slipping back into recession. Analysts say the market is somewhat soothed by the possibility that the Federal Reserve will cut interest rates further at next week’s meeting or in September.

“The feeling is the Fed will be there with a safety net,” said Alan Ackerman, executive vice-president at Fahnestock & Co.

But analysts credited much of Wall Street’s buying spree to technical factors such as short-covering. In short-covering, investors who sold stock guessing the market was going to keep falling are forced to buy shares to cover their bets when the market turns higher.

“What is happening is more short-covering in a down market. I don’t think we have really seen the bottom,” said Al Mirman, strategist at V Finance in Sarasota, Florida. “We are having short-term upswings in a down market. ... And, quite frankly, we could see some difficult times for the balance of the year.”

Among today’s winners, Citigroup climbed dlrs 2.38 to dlrs 33.90 after announcing it would begin charging stock options as an expense against earnings. Several companies, including General Motors and General Electric, have announced they will count options as expenses.

Intel rose 67 cents to dlrs 18.39 after saying it would not charge stock options as a regular quarterly expense, but would provide more details about its stock-option programmes.

Retailing shares were mixed following reports that meagre inventories and skittish consumers pinched July sales at many stores.

AnnTaylor rose dlrs 2.23 to dlrs 26.36 after raising its outlook for the second and third quarters.

But Best Buy plunged 36.5%, down dlrs 11.25 to dlrs 19.55, after cutting its second-quarter earnings outlook, citing flat same-store sales for the past four weeks.

Advancing issues outnumbered decliners more than 2 to 1 on the New York Stock Exchange, where volume was moderate.

The Russell 2000 index, the barometer of smaller company stocks, rose 6.37, or 1.7%, to 389.84.