New York: Wall Street took a drop in factory orders in stride on Tuesday, holding on to its gains as investors looked forward to putting the uncertainty of the presidential voting behind them. The Dow Jones industrial average soared nearly 250 points.
The Commerce Department said factory orders fell 2.5% in September from August levels, much worse than the 0.7% drop analysts had predicted. But investors generally expect data from September to be extremely weak, as credit markets began to seize up at mid-month, and analysts say some of the bad news may already be factored into stock prices.
Investors have been anxious this week ahead of the election. Analysts predict stocks are headed for a recovery no matter who is elected, as the policies of both John McCain and Barack Obama will likely be guided by the weak economy and the recent flood of government support designed to keep the global financial system from collapsing.
Still, Wall Street has had a better tone over the past week. Last week saw the Dow rise 11.3%, its best weekly gain in 34 years. Although many analysts predict the market will see more volatility as it recovers from devastating selling during much of October, many also believe that the worst of the losses are over.
In midmorning trading, the Dow rose 246.27, or 2.64%, to 9,566.10.
The broader indexes also rose. The Standard & Poor’s 500 index gained 30.71, or 3.18%, to 997.01, while the Nasdaq composite index rose 39.35, or 2.28%, to 1,765.68.
The Russell 2000 index of smaller companies rose 7.91, or 1.47%, to 546.41.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to a light 1.02 billion.
Investors have overlooked a spate of bad economic data recently, including a report Monday from the Institute for Supply Management that revealed the worst monthly contraction in manufacturing activity. Additionally, automakers reported the lowest level of US car sales in more than 17 years. The market closed narrowly mixed in light trading Monday, with the Dow making just a single-digit point decline _ something that has become unheard of in recent months in the midst of daily several hundred point swings.
The key bank-to-bank lending rate known as Libor fell to 2.71% from Monday’s rate of 2.86% for three-month dollar loans. A fall in the London Interbank Offered Rate indicates that banks are more willing to lend to one another.
Investors’ demand for short-term government debt remained high, however, a sign that they are still cautious. The yield on the three-month Treasury bill, seen as one of the safest assets around, rose only slightly to 0.49% from 0.47% Monday. A low yield indicates high demand.
The yield on the benchmark 10 year Treasury note fell to 3.90% from 3.92% late Monday.