NEW YORK (AFP) - Wall Street regained some vigor in the wake of the re-election of President George W. Bush and a retreat in oil prices from record highs, suggesting a possible breakout from the market's long trading range.
A report Friday showing a surprisingly strong labor market prompted some analysts to say a bull market may be underway, although others retained a cautious posture.
In the week to Friday, the Standard and Poor's 500 broad-market index rose to its highest level in two-and-a-half years, jumping 3.2 percent to 1,166.17.
The Dow Jones Industrial Average soared 3.6 percent to 10,387.54 and the tech-heavy Nasdaq composite advanced 3.3 percent to 2,039.94, as both indexes pushed to their highest levels since June 30.
The major indexes staged back-to-back rallies in the wake of the re-election of the Republican president seen as more market-friendly, while a drop in crude oil futures below the key 50-dollar level underpinned gains.
On Friday, the market got a positive surprise -- the October labor report showed 337,000 jobs created, blowing past most forecasts and suggesting the economy was accelerating and lending further support to Wall Street.
"Overall, the market is obviously heading into the end of the year on a very bullish note," said Jay Suskind, market strategist at Ryan Beck and Company.
While high oil prices are still being watched by the market, a retreat from a record of around 55 dollars to under 50 dollars a barrel helped ease concerns.
Most of the rally was attributed to the Bush victory, and the avoidance of an inconclusive result marred by litigation as was the 2000 election.
"It's an instinctive Bush rally," said Jim Awad of Awad Asset Management.
"The market likes lower taxes, the market likes less government interference, the market likes privatization."
Some analysts said the market appeared to be coming out of its rut of the past several months, with the indexes hovering a relatively narrow trading range.
"Recent strong momentum, Wall Street-favored election results and a positive seasonal period all support our view that the market will trade moderately higher into year-end," added Alfred Goldman at AG Edwards.
Bob Dickey at RBC Dain Rauscher said the market was approaching key resistance levels that could determine whether a bull market is here.
"The market certainly has established a trend by rising eight days in a row, and is closing in on the Dow resistance at 10,400, which is the number to get through in order to turn the market into a longer-term bullish trend from the range that it has been stuck in all year," he said.
Tobias Levkovich at Smith Barney is keeping a more guarded outlook, saying the Bush re-election does not change the fundamental outlook for Wall Street.
Levkovich said the market still faces a sluggish economy and corporate earnings that may start decelerating.
"In our view, the market may not end up being as happy with a Bush Administration as investors may assume," he said.
"The Bush administration will have to govern a very polarized nation, deal with Iraq, continue to fight the war on terrorism, address the budget deficit constraints, and try to stimulate an economy faced with high energy prices, sluggish job growth, and a growing current account deficit. None of these factors have disappeared with the passing of Election Day."
Bonds retreated as investors shifted into the stock markets and bet on higher interest rates in response to the strong economic data. The yield on the 10-year US Treasury bond jumped to 4.192 percent from 4.029 percent a week earlier and that on the 30-year bond to 4.904 percent from 4.794 percent. Bond yields and prices move in opposite directions.
11/05/2004 - 23:06 GMT - AFP