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Investors Flock to Blue Chips As Dow Goes Up Nearly 500

By Sharon Walsh

Wall Street had one of its grandest days ever Thursday as investors stormed into the old, stalwart blue-chip stocks that had been out of favor for months, driving the Dow Jones industrial average up nearly 500 points.

The rising tide of the Dow lifted all of the market’s sectors, smashing the New York Stock Exchange’s record for trading volume, bringing the high-tech stocks of the Nasdaq index charging back from a three-day slump and elevating the S&P 500 index to within 100 points of its peak.

“If you owned a stock that went down today, you need a new broker,” said Henry Cavanna, the senior equity portfolio manager at JPMorgan Investment Management.

The powerful move in the market illustrated how it is being pushed and pulled by huge swings in investor psychology, which Thursday found investors running to blue chips.

Still, every sector of the market benefitted: Financial stocks, retail stocks, consumer stocks, insurance, industrial companies, even energy companies were lifted by the buying pressure in the old-economy stocks that had been left for dead. Technology stocks -- from start-up dot coms to old-style IBM and Intel -- also enjoyed the ride.

The Dow closed up 499.19 points, or 4.9 percent, at 10,630.60, wiping out the previous record point gain of 380.53 on Sept. 8, 1998. The Nasdaq composite index closed up 134.77, or 2.9 percent, at 4,717.39, after being down as much as 127 points early in the day.

Awe-struck market veterans were at a loss to explain the sudden surge as the result of any particular event.

There was no surpising announcement that made the public believe that General Electric was suddenly going to sell more light bulbs or Procter & Gamble more soap. Banks didn’t merge. There were no startling discoveries in technology or a cure for the common cold. Alan Greenspan didn’t suddenly change his stance on interest rates.