The pre-Labor Day rally gathered steam Wednesday as transportation stocks again showed the way.
The Dow Jones industrial average gained 24.05 points to 3290.31 in active trading on the New York Stock Exchange. The Dow transportation index gained more on a percentage basis, climbing 29.73 points to 1269.93.
The transportation index has risen 4.4 percent since Friday. Many analysts believe a bull market in transportation stocks, even one sparked by higher ticket prices instead of better sales volume, is a prerequisite for a rally in the industrials. UAL climbed $1.75 to $109.25.
Also boosting stock and bond prices was a wire service report, attributed to unnamed Federal Reserve sources, that the dollar`s slump in foreign exchange markets won`t prevent another round of interest rate cuts. The dollar again hit a new low against the German mark Wednesday before rebounding slightly late in the day.
Wednesday`s gain in the broader S&P 500 index was less robust, up 1.91 to 417.98. Some analysts speculated that the upward moves in the Dow industrial and transportation indexes reflected thin trading during a peak vacation season.
But Richard Zurek, Chicago-based investment officer for Robert W. Baird & Co., said some investors think the long-awaited economic recovery in the United States is at hand and are selectively buying stocks.
”People want to get in early” and are especially favoring the so-called cyclical stocks, he said. One such stock, Cummins Engine, climbed $2 to $65 Wednesday.
Department store stocks also had a good day in advance of monthly sales reports, although Walgreen Co. fell 12 cents to $38.62 after it said August sales rose only 5.1 percent on a same-store basis.
Technology and medical stocks, especially those traded on the Nasdaq system, climbed as investors began experimenting again in those sectors. The Nasdaq composite index rose 5.64 points to 571.25. Apple Computer rose $2 to $48.50. Several Big Board technology stocks also jumped. Motorola gained $2.37 to a 365-day high of $88.87.
Labor news
Next up on the financial calendar are reports on employment. Several analysts have said investors are staying on the sidelines in advance of Friday`s jobs report. Considering the often complex logic of Wall Street, however, it`s not clear what they`re waiting for.
Stock and bond investors might take heart if the expected slight decline in the unemployment rate turns out to be worse. A bad unemployment report might boost chances for lower interest rates. On the other hand, a
surprisingly bad report also boosts chances of a Democratic victory in November-an outcome financial markets are said to disdain.
If the report is more upbeat than expected, the bond market might swoon on fears of inflation, and stock investors could be put off by the realization that interest rates may not be dropping soon.
But a positive report might also add fuel to the stock market as investors rush to climb aboard the economic recovery bandwagon, such as it is. The three-day Labor Day weekend may be needed to sort out the impact of the numbers.
Local news
Riddell Sports, maker of football helmets for the National Football League and other teams, closed unchanged at $5.75 after 192,900 shares changed hands.
BSN Corp. of Dallas denied rumors it plans to dump its 24 percent stake in Riddell, Dow Jones reported.
Waste Management climbed 37 cents to $33.25 on 1.7 million shares after A.G. Edwards in St. Louis issued a ”buy” recommendation.
Waste Management has been trading around its 365-day low.
Illinois Power lost an appeal to the Illinois Commerce Commission for a rehearing on a ruling that keeps the utility from recovering $230 million of the cost of its Clinton nuclear power plant.
The company said that it plans to move to the Illinois appellate court, Bloomberg Business News reported. Illinois Power closed unchanged at $21.87.
Separately, Commonwealth Edison hit a new 365-day low of $23.50 during the day.
