. NEW YORK — A stock market growing in confidence rallied for a second straight session today as investors bet that President-elect...
NEW YORK — A stock market growing in confidence rallied for a second straight session today as investors bet that President-elect Barack Obama’s plan to dramatically ramp up infrastructure spending would help boost the crippled economy. All the major indexes advanced more than 3 percent, including the Dow Jones industrial average, which crossed above the 9,000 level in late trading, though it couldn’t hold above that threshold.
At the close, the Dow was up 298.76, or 3.5 percent, at 8,934.18, after earlier rising as high as 9,026. The blue-chip index had risen 259 points Friday.
Broader indexes also rose today
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. The Standard & Poor’s 500 index advanced 33.63, or 3.8 percent, to 909.70, and the Nasdaq composite index jumped 62.43, or 4.1 percent, to 1,571.74.
It was the ninth advance in 11 sessions for the Dow and the S&P 500.
Obama announced plans over the weekend for the largest U.S. public works spending program since the creation of the interstate highway system a half-century ago. That could bolster the economy by putting thousands of people to work building schools and other construction projects.
That helped to give a lift to a range of companies, from machinery makers to materials producers. Alcoa, the world’s third-largest aluminum producer, surged 19 percent on the news; while heavy-equipment maker Caterpillar jumped 13 percent.
Investors also grew more confident that the government was near a deal to dole out billions to America’s three biggest automakers. The White House said today that it was “very likely” to strike an agreement with Congress on funneling money to General Motors, Chrysler and Ford. The package is expected to total about $15 billion.
Obtaining the aid might come in exchange for the jobs of the companies’ top executives. Sen. Chris Dodd, D-Conn., who chairs the Senate Banking Committee, said Sunday that Rick Wagoner, GM’s chief executive, “has to move on.”
The stock market has been gaining in confidence since a number of reports last week that seemed to indicate the recession is showing no signs of weakening. As the week progressed, the market appeared to be taking the bad news in stride — even Friday’s Labor Department report that showed the nation lost more than a half million jobs last month. The report raised hopes that the government would take more steps to stimulate the economy.
Still, analysts said the market remains fragile.
Scott Fullman, director of derivative investment strategies with WJB Capital, warned that the move higher for U.S. markets should be treated cautiously. He said credit still remains tight around the world and that there are still a number of other worries hanging over the market.
“I’d be very cautious about jumping in with both feet and expecting what could be a Santa Claus rally going into the New Year,” he said. “The fact is, we’re not seeing the credit markets opening up, we’re not seeing buying of the distressed debt, and that leads to additional worries for stocks.”
The move higher follows a global rally as investors took heart from signs the world’s largest economies are redoubling efforts to revive growth. In China, government officials this week are meeting to discuss possible new steps to expand the $586 billion stimulus that is already in place.
Hong Kong’s Hang Seng index vaulted 8.7 percent to its highest close in seven weeks, while Japan’s Nikkei 225 average rose 5.2 percent. Major European bourses also showed big gains. Britain’s FTSE-100 climbed 6.2 percent, Germany’s DAX jumped 7.6 percent, and France’s CAC-40 surged 8.7 percent.
Bond prices fell as stocks rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.74 percent from 2.70 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, was unchanged at 0.01 percent, still indicating a high degree of investor uneasiness.
The dollar was mixed against other major currencies, while gold prices rose.