A little positive news goes a long way.
Legal and legislative developments Wednesday in corporate ethics scandals that have unnerved investors helped stocks break a nine-week losing streak. The Dow Jones industrial average was up 6.4 percent in its second-biggest one-day rally ever. The Dow spiked 488.95 points to close at 8,191.29. Other indicators also closed sharply higher.
The advances were a dramatic break from the punishing losses since mid May. Among the action in the corporate scandals that was credited with triggering a broad rally that grew as trading continued was:
ADELPHIA ARRESTS: Accused of using the nation's sixth-largest cable operator as a "personal piggy bank," Adelphia Communications founder John Rigas, 78, and his sons, Michael, 48, and Timothy, 46, were roused from their New York apartments at 6 Wednesday morning. Along with two other former executives, they are charged with looting the company of more than $1-billion and driving it into bankruptcy.
CORPORATE REFORM: An agreement between House and Senate negotiators on how to crack down on corporate fraud sets the stage for prompt final passage and President Bush's signature. The legislation creates new criminal penalties and harsh jail terms for wrongdoers and an independent board to oversee accounting firms.
Still, many market observers had doubts that the rebound would be sustained.
In fact, after the markets closed, AOL Time Warner said regulators were looking into its accounting practices _ a reminder that concerns about the truthfulness of corporate ledgers have not been put to rest.
Details in Business, 1E