Dow Reclaims 8,000-Point Pinnacle Huge Gain Extends Recovery From October Plunge

The Dow Jones industrial average soared nearly 200 points Monday in its fourth-biggest point gain ever to close above 8,000 for the first time since before the steep drop in late October that raised suspicions about the health of Wall Street’s seven-year climb.

The stock market found new confidence in easing economic troubles in Asia and signs of moderate economic growth with low inflation at home.

The Dow rose 189.98 to 8,013.11 in heavy trading with banking and financial stocks leading the surge amid renewed confidence that the worst of the Asian crises had passed.

The Dow’s 2.4 percent rise still leaves it about 250 points short of its Aug. 6 record of 8,259.31 and brings its gain so far this year to more than 24 percent. The Dow last closed above 8,000 on Oct. 22 and five days later fell to 7,161.15 in a 554-point selloff triggered by plunging stock markets in Asia.

Most broad-market indicators also posted big gains MOnday, with the Standard & Poor’s 500 stock list moving within 9 points of its record of 983.12. The S&P rose 2 percent and the Nasdaq Stock Market gained 1.89 percent.

The monthly report from the National Association of Purchasing Management showing slower growth in the manufacturing sector gave the stock market a kick higher this morning. The Dow had started the day higher on the back gains overnight in Asian stock markets.

The trade group said its monthly index of business activity, compiled from interviews with corporate purchasing executives nationwide, fell to 54.4 percent from an unexpectedly strong 56.0 percent in October.

The report also showed that while prices for some raw materials rose last month, overall inflation was down. The group’s price index in November fell to 51.9 percent from October’s 55.9.

“It’s actually a very friendly report for the U.S. markets. It shows continued economic growth against a backdrop of modest price pressure,” said William Sullivan, a senior economist at Dean Witter Securities.

The purchasing managers’ report is widely followed by economists, including Federal Reserve Board Chairman Alan Greenspan, because it is usually the first indicator of how the economy fared in the previous month. Any reading over 50 percent in the purchasing managers’ index is a sign that manufacturing is growing.

A separate report from the government Monday also indicated slight growth in the economy. The Commerce Department said construction spending edged 0.1 percent higher in October, the fourth straight monthly gain, on increased building of apartment houses and in government projects.

And in another dose of good economic news, oil prices slipped in the first trading since the 11-nation Organization of Petroleum Exporting Countries boosted the cartel’s official production level by 10 percent.

Light sweet crude oil for delivery in January fell 49 cents a barrel to $18.66 today on the New York Mercantile Exchange. Brent crude for January delivery was off 78 cents a barrel to $18.16 on the International Petroleum Exchange in London.

Lower prices for oil, widely used in heating homes and fueling industries, can help ease inflationary pressures.

The purchasing managers’ survey also indicated that manufacturing employment was up during the month. But the purchasing managers’ production index dipped to 58.6 percent from 60.0 percent, while the new orders index dropped to 54.5 percent from 59.0 percent - declines that pulled the overall index downward.

Some of the stocks that moved substantially or traded heavily Monday:

NYSE

Warner-Lambert, down 25-7/8 at 114.

Citing reports of serious liver damage, Glaxo Wellcome of Britain decided to stop selling troglitazone, a diabetes drug that Warner-Lambert sells in the United States. The drug, sold under the name Romozint, is licensed to the companies by Sankyo of Japan.

First of America Bank, up 14 at 72-3/4.

National City, down 3 15/16 at 62 13/16.

The Midwestern banks agreed to merge in a deal valued at $6.5 billion. Cleveland-based National City is to issue 1.2 shares of its stock for each share of First of America, which is based in Kalamazoo, Mich.

Pfizer, up 3-1/4 at 76.

Merrill Lynch raised its near-term rating on the drugmaker’s stock to “buy” from “accumulate,” the Dow Jones News Service reported.

NASDAQ

At Home, up 1-5/8 at 22-1/4.

The company announced plans to offer high-speed Internet access service for business travelers staying in hotels. At Home offers high-speed Internet connections via cable modems.

Thermo Tech Technologies, up 5/32 at 2 3/16.

Hyundai Precision & Industry of South Korea plans to work with the Canadian company to promote the construction of organic waste recycling plants using Thermo’s technology.

Medicis Pharmaceutical, up 1-1/2 at 42-1/4.

The Phoenix-based skin-care company agreed to acquire GenDerm, a privately held drug and skincare products company based in Lincoln, Ill., for $60 million.