The market staged a furious rally on top of the one it had going in the final hour of trading that lifted the Dow to its second-largest point gain ever. The Dow rose 890, or 11%, to finish at 9,065.12. The biggest point gain for the Dow was 936 back on October 13. In the final hour alone the Dow doubled its 450 point gain it had going for the day.
The market surge came on no real newsworthy event although the bulls are expecting an interest rate cut on Wednesday by the Federal Reserve. The bounce could be attributed to testing a bottom but the Dow hasn’t tested its October 10 low of 7,773 (yet). For now its looks as though 8,000 is providing support and the close above 9,000 was bullish. Very bullish.
The rally was also surprising given the weak consumer confidence report that came out earlier in the day. The index fell to a record low of 38 for the month, well below 51 which was what Wall Street had expected.
Of course, with today’s rally we saw some huge moves in quite a few of the Dow stocks. Alcoa (AA, $10.78, up $1.74), Exxon Mobil (XOM, $74.86, up $8.77) and Chevron (CVX, $70.02, up $8.31) all had oustanding days rising 13%-20%. Verizon Communications (VZ, $31.65, up $4.04) added another 15% on top of Monday’s 10% gain. The oil stocks zoomed higher despite another drop in the price of crude which is now at $62/ barrel.
If we can get through this week without a test of the October lows then we could be setting up for a decent rally. The bulls seem to be charging ahead as if the market has made a bottom. One thing I can say about the bears. They might not be spitting in the wind but they may tug on Superman’s cape (meaning the bulls) one more time before we are officially out of October.