NEW YORK – Wall Street resumed its advance Tuesday as investors bought technology and financial stocks to beef up their portfolios on the last day of the quarter.
The Dow Jones industrial average, which added more than 180 points in afternoon trading, was on track for its biggest monthly gain in nearly nine years.
Analysts attributed much of the market’s jump to large investors loading up on rising stocks in order to report strong holdings at the end of the first three-month reporting period of 2009, which ends on Tuesday.
Investors shrugged off lackluster economic data and snatched up some of the biggest names in technology and banking including Google Inc., International Business Machines Corp., Bank of America Corp. and Citigroup Inc.
The market is coming off a two-day pullback as stocks took a breather following a three-week rally that brought the Dow Jones industrial average up 21 percent since early March. That surge was driven by optimism that U.S. banks may be emerging from the worst of a lending crisis.
The government finally delivered details last week of its plans to take failed loans off the books of struggling banks and leaders of several large banks have said they did well in January and February.
The financial sector is likely to get another dose of good news later this week. The Financial Accounting Standards Board is widely expected to ease accounting rules that require companies to list their assets at current market values.
Banks have had to take massive writedowns over the past two years as the value of mortgage-backed securities and other investments has withered. Banks say a softening of the “mark-to-market” rules would help their bottom lines.
Keith Wirtz, president and chief investment officer at Fifth Third Asset Management in Cincinnati, said the gain in bank stocks on Tuesday was likely boosted by some short-covering in anticipation of a resolution on the rules, as traders don’t want to miss out on a possible rally in financials later this week. Short covering, or the buying of stocks to cover bets that stocks would fall, has played a large role in the surge in bank stocks over the past few weeks.
In late afternoon trading, the Dow Jones industrial average rose 180.56, or 2.4 percent, to 7,702.58. The Standard & Poor’s 500 index gained 19.98, or 2.5 percent, to 807.51, while the technology-heavy Nasdaq composite index rose 43.74, or 2.9 percent, to 1,545.54.
The Russell 2000 index of smaller companies rose 12.69, or 3.1 percent, to 428.66.
Advancing issues outnumbered decliners by about 5 to 1 on the New York Stock Exchange, where volume came to 880.7 million shares
The Associated Press