Wall Street: Wednesday close

EXUBERANCE reigned on Wall Street on signs the US economy is rebounding - on the fifth anniversary of Federal Reserve Board chairman Alan Greenspan's warning to investors against 'irrational exuberance'.

The Dow Jones Industrial Average closed above 10,000 for the first time since 5 September and the Nasdaq Index burst through 2000 for the first time since 8 August as investors went on a buying spree. The Dow soared 220.45 points or 2.2% to 10,114.29, roughly 4,000 points above where it stood when Greenspan issued his caution. The Nasdaq leapt 83.74 points or 4.3% to 2046.84.

Sparking the rally was data from the National Association of Purchasing Managers showing that non-manufacturing - or service - sectors of the economy shifted back into growth mode in November, after plunging to recession levels in October. The index, based on a survey of businesses, jumped to 51.3 last month, from 40.6 in October and well above the 43 expected by economists. A level above 50 indicates the economy is expanding. The non-manufacturing sectors make up 80% of the economy and include computers and related tech products and services.

Investors piled into shares, afraid they were 'missing the train leaving the station,' according to one analyst. Noah Blackstein, portfolio manager at Dynamic Power American Fund, said: 'There are signs that things are starting to improve. The debate is now over the shape of the recovery, rather than how much further can we fall.'

Steven Wieting, economist with Salomon Smith Barney, raised his estimate of company earnings for 2001 and 2002. 'A synchronised global recovery in 2003 and 2004 could help US earnings recover sharply, but earnings abroad in 2002 will still likely fall,' he said in a research note.

Techs were the biggest beneficiaries of the buying. Cisco Systems, which started the ball rolling with an upbeat report on Tuesday, vaulted $1.02 or 5% to $21.54. Software maker Oracle surged $1.57 or 11% to $15.37 after chief executive Larry Ellison said profit margins could return to the generous levels of 2000 if the economy strengthens. Ellison's shareholding in Oracle, the second biggest software maker to Microsoft, posted a $2bn (£1.3bn) paper gain on the day. IBM added $4.76 or 4% to $121.40, Intel tacked on $1.75 or 5.3% to $34.61 ahead of a briefing on its outlook and Microsoft was marked up $2.10 or 3.2% to $68.10.

Financials, beaten down by the fall-out from the Enron implosion, were led higher by JP Morgan Chase, ahead $1.80 or 4.8% to $39.02, and Citigroup, up $1.17 or 2.5% to $49. American Express surged $1.26 or 3.8% to $34.61.

Enron, which touched 25 cents on Friday before filing for bankruptcy protection, continued its ascent, climbing 14 cents or 16% to $1.01.

ExxonMobil added 57 cents or 1.5% to $38.88 as oil prices jumped as much as 5.8%, boosted by Russia's decision to cut production.

But Ford Motor reversed 95 cents or 5.4% to $16.79 after warning fourth-quarter losses would be far deeper than previous forecasts. Rival GM, which has also used zero-interest financing to boost car sales, ran up $1.33 or 2.7% to $51.13.

AOL Time Warner climbed $1.08 or 3.1% to $35.83 as it announced the retirement next May of chief executive Gerald Levin. Among Dow components, Walt Disney leapt $1.65 or 8.3% to $21.65, DuPont added $1.31 or 3% to $45.26 and Wal-Mart fell $1.40 or 2.5% to $56.57.