Stocks bounce around,
finish on positive note
Bargain hunters restore momentum
after a disappointing report from the Fed
NEW YORK >> Wall Street looked past an underwhelming statement by the Federal Reserve yesterday and rebounded smartly as bargain hunters picked up stocks battered by a week of heavy losses.
The market focused on economics and earnings, particularly a bright outlook from manufacturing giant 3M Co., which upped its quarterly and full-year estimates. The Commerce Department also reported that the construction sector remained healthy.
Stocks bounced around for much of the day as investors first awaited the Fed's decision on interest rates and accompanying statement, and then fell in disappointment as the central bank confirmed the market's assessment that job creation is lagging.
"The market was hoping that the Fed knew something that it didn't," said Brian Pears, head equity trader at Victory Capital Management. "But they're looking at the same data as everybody else."
But bargain hunters, keeping the upbeat economic and earnings data in mind, restored the market's momentum late in the session.
The Dow Jones industrial average rose 81.78, or 0.8 percent, to 10,184.67. The Dow opened more than 100 points higher, then slid to single digits gains after the 2:15 p.m. Fed announcement before rallying by the end of the session.
Broader stock indicators were modestly higher. The Standard & Poor's 500 index gained 6.21, or 0.6 percent, to 1,110.70. The tech-heavy Nasdaq composite index gained 3.89, or 0.2 percent, to 1,943.09.
The price of the Treasury's 10-year note closed up58 point, while its yield fell to 3.69 percent from 3.77 percent yesterday. Two-year Treasury notes rose332 point and yielded 1.48 percent, down from 1.53 percent yesterday.
The Fed said it could be "patient" in adjusting rates, the same language it used in February. But with investors worried of late about the nation's job growth, the Fed's statement did nothing to assuage Wall Street's fears. Without new jobs, the economic recovery could stall as companies try to wring more productivity out of their current operations instead of expanding.
"It's a bit like a game of chicken," said Chris Wolfe, global head of equities for J.P. Morgan Private Bank. "Productivity will drive the economy for now, but soon investors will have to look at whether companies are making the most of their capital. And the companies are facing higher labor costs and having to decide if that's where they want to put their money."
3M gained $3.94 to $78.81 after it raised its earnings estimates, crediting elevated sales, favorable exchange rates and strong growth in its display and graphics division.