Dow Industrials Roar Back Over 13000 As Stock Investors Regain an Appetite

Dow Industrials Roar Back Over 13000 As Stock Investors Regain an Appetite
By PETER A. MCKAYMay 2, 2008; Page C1
Stocks are clawing their way back toward even ground.
The Dow Jones Industrial Average rose 189.87 points, or 1.5%, to 13010.00, cutting its year-to-date loss to 1.9%.
Investors rushed back to stocks and away from commodities. The result was the Dow's first close above 13000 since Jan. 3 -- bringing it 254.82 points away from being flat for the year, though it remains down 8.2% from its October peak.
The biggest loser in the commodity pullback among Dow components was Exxon Mobil, which fell 3.6%. The energy giant posted a 17% rise in first-quarter profit but missed analysts' expectations.
Recently, many speculators have piled into raw materials as an alternative to the stock market, which they viewed as risky in light of Wall Street's credit crunch and the broader economic slowdown. Many analysts have said that, at some point, those bets will likely be unwound in favor of a more traditional approach emphasizing broad-based stock portfolios.
A round of such reshuffling took place Thursday. Credit markets have calmed in the past few weeks, which has some investors willing to shift back into asset classes that had been suffering. The Fed's decision Wednesday to signal that it might be done cutting interest rates also has investors shifting away from investments -- like commodities -- that do well during inflationary periods.
Many analysts said it remains unclear whether a broader reversal is in place. Skeptics argue that the economy doesn't have the strength to sustain a strong stock rally. Moreover, the commodity boom, fueled in part by strong growth in developing economies, might not be over.
"I think commodities have hit an intermediate top, but they haven't for the long term," said strategist Al Goldman, of Wachovia Securities.
The broad-based Dow Jones-AIG Commodity Index tumbled 2.2%, or 4.549 points, to 204.003. A recent respite from the long-running oil rally continued. A rebounding dollar also helped to push crude futures to their third straight loss, down 94 cents, or 0.8%, at $112.52 a barrel in New York.
In the stock market, financial stocks were notably strong. Dow components Citigroup and J.P. Morgan Chase rose 4.2% and 3.4%, respectively.
Some investors are also pulling money out of safe-haven gold. But Howard Simons, of Bianco Research in Chicago said the natural-resource sector as a whole in April still seemed to experience a net influx of money from investment funds and other deep-pocket players who are likely to stick with their bets awhile longer. "Some of these institutional guys are like aircraft carriers. It takes awhile to get them turned around," Mr. Simons said.