The close: Gurus speak, investors buyRTGAMA global recession has not been averted and the financial system is not humming again. But after yet another deep stock market rout early on Thursday, investors couldn't sit on the sidelines any longer: They stepped back into the market, sending U.S. stocks up and erasing most of the losses in Canada.It only helped that prominent voices from the professional investment community - some of them notoriously bearish until recently - are suggesting that the low markets are a gift to long-term investors.Jeremy Grantham, chairman of GMO, told Reuters: "The early purchases will be painful.
But if you could slice in and do some buying before and after the low, seven years from now you will not regret it."Chris Orndorff, managing principal at Payden & Rygel Investment Management, told Reuters: "Things have just gotten a bit silly. We are very, very close to a bottom in equities."John Hussman, Hussman Funds, in a note to investors: "On nearly every measure - sentiment, valuation, volatility, oversold conditions, and others, we are observing extremes associated with strong expected return/risk profiles, on average. My impression is that investors underestimate the potential for a very rapid 20 to 25 per cent market advance as risk aversion collapses."Somebody listened.
The Dow Jones industrial average closed at 8979.26, up 401.35 points or 4.7 per cent. From its low point earlier in the day, the index rallied 780 points. Of the 30 stocks in the index, 27 rose. The broader S&P 500 closed at 946.43, up 38.59 points or 4.3 per cent.Exxon Mobil Corp. rose 11.4 per cent, Wal-Mart Stores Inc. rose 9.1 per cent, Microsoft Corp. rose 6.8 per cent and General Electric Co. rose 3.3 per cent. Citigroup Inc. missed out on the rally, falling 2 per cent.In Canada, the S&P/TSX composite closed at 9269.97, down 53.88 points or 0.6 per cent.
But this is a case where down looks up: The index rallied more than 500 points from its low. The winners included Royal Bank of Canada, up 1.5 per cent, and Research In Motion Ltd., up 4 per cent.Even though the price of crude oil fell below $70 (U.S.) a barrel, closing in New York at $69.85, a number of energy producers performed well. Canadian Oil Sands Trust rose 10.6 per cent and EnCana Corp. rose 5 per cent. Gold producers, however, were hit hard by a low reading of U.S. inflation in September, which sent the price of gold down to $804.50 an ounce. Barrick Gold Corp. fell 12.5 per cent and Goldcorp Inc. fell 10.9 per cent.Copyright 2001 The Globe and Mail