Dow Snaps Back, Jumps A Record 257 Points

Economy

The Dow Jones industrial average surged a record 257 points on Tuesday as summer break ended with a break in the string of unsettling economic news that unnerved the markets during August.

The Dow rose 257.36 to 7,879.78, wiping out most of last week’s 265-point slide. It was the biggest one-day point gain ever for the Dow, beating a nearly 10-year old record of 186.84 points that came two days after the Black Monday crash of October 1987.

In percentage terms, Tuesday’s 3.4 percent gain was only one-third as big as the 10.1 percent rally represented by the 1987 record. Still, it was the biggest percentage gain in more than six years.

Broader stock indicators also rallied on Tuesday as interest rates fell in the bond market following the release of the first major reading on last month’s economic activity.

The Standard & Poor’s 500-stock list set a new point-gain record as well, also breaking a mark dating from the 1987 crash rebound, and the Russell 2000 list of smaller companies closed at a record high for the fourth consecutive session.

“Once again we’ve been challenged by a host of potential threats that are now near-misses,” said Joe Battipaglia, chief investment strategist at Gruntal & Co. “Investment managers, who are now coming back to work, are looking at what the market has to offer and see better prices than a few weeks ago.”

Advancing issues outnumbered decliners by a nearly 3-to-1 margin on the New York Stock Exchange, where volume was up sharply from last week’s sluggish pace, but still fairly modest at 491.82 million shares as of 4 p.m.

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

NYSE

Breed Technologies, up 1-13/16 at 23-1/16.

The company agreed to acquire AlliedSignal’s seat belt and air bag business for an undisclosed amount of cash.

Brilliance China Automotive Holdings, up 2-9/16 at 10-3/4.

The minibus manufacturer reported a first-half profit that quintupled its results for the same period a year earlier.

NASDAQ

Verity, down 1-3/8 at 5-1/16.

The maker of Internet search software warned that it will post a bigger-than-expected loss for its first quarter ended Aug. 31. Verity said it was hurt by substantial employee turnover.

FX Energy, down 3-1/2 at 5-5/8.

The Salt Lake City-based company announced that a test well in the Baltic region is not capable of commercial production.

Innovative Medical Services, up 9/16 at 2-9/16.

The company agreed to buy APO Health & Universal Medical Distributors from Xetal Inc. of Oceanside, N.Y., for an undisclosed amount.