Stocks Rise to Records as Investors Pour Cash into Undervalued Companies

Strategic Insights -

Investors are pouring cash into undervalued companies, sending stocks to records for a second day in a row. The Russell 2000 index, which tracks smaller stocks, set its first record since October, and this year's rally has broadened to include smaller stocks. The Dow Jones industrial average rose 32.63, or 0.4 percent, to 8675.75, its third straight record. International Paper Co. and Weyerhaeuser Co. were among the biggest gainers, rising 1 7/16 to 51 7/8 and 3 3/8 to 55 3/4, respectively.

Key Takeaways:

  • The Russell 2000 index of smaller stocks set its first record since October, signaling that this year's rally has broadened to include smaller stocks.
  • The Dow Jones industrial average rose 32.63, or 0.4 percent, to 8675.75, its third straight record.
  • International Paper Co. and Weyerhaeuser Co. were among the biggest gainers, rising 1 7/16 to 51 7/8 and 3 3/8 to 55 3/4, respectively.
  • An estimated net $5.85 billion flowed into stock mutual funds in the week ended Monday, up from $4.02 billion the previous week, according to Trim Tabs Financial Services Inc.
  • Confidence in computer-related companies helped send stocks higher, with Sun Microsystems Inc., Intel Corp., International Business Machines Corp., and Compaq Computer Corp. all rising.
  • Cisco Systems Inc. rose 1 1/4 to 62 5/8 after analysts said its acquisition of NetSpeed Inc. was a good buy.

Statistics:

  • The Dow Jones industrial average rose 32.63, or 0.4 percent, to 8675.75.
  • The Russell 2000 index set its first record since October.
  • An estimated net $5.85 billion flowed into stock mutual funds in the week ended Monday, up from $4.02 billion the previous week.
  • Cisco Systems Inc. rose 1 1/4 to 62 5/8.
  • Intel Corp. rose 3/8 to 75 7/8.

Sources:

  • USA Waste Services Inc. buying Waste Management Inc., cited in the article as a reason for the rise in Allied Waste Industries Inc.
  • Trim Tabs Financial Services Inc., cited as a source for the estimated net $5.85 billion that flowed into stock mutual funds in the week ended Monday.
  • Jefferies & Co., cited for a quote from Bill Allyn, director of trading, on the market's confidence.
  • Perritt Capital Management, cited for a quote from Gerald Perritt, president, on the market's performance.