Market regains ground amid troublesome signs
NEW YORK » Wall Street managed to regain some lost ground yesterday on new dealmaking and a few strong profit reports, but mounting signs of a tougher lending climate continued to dog the market.
Wall Street, coming off yesterday's 226-point tumble in the Dow Jones industrial average, lurched up and down throughout yesterday's session.
It appeared to draw confidence from better-than-expected quarterly earnings at Amazon.com Inc. and Boeing Co.
Still, some investors worried that deteriorating lending conditions in both the home mortgage and corporate debt markets will cork this year's huge stream of dealmaking.
Buyouts usually involve taking on debt, and yesterday, the banks raising funds for the turnaround of Chrysler Group had to postpone a $12 billion debt offer after investors balked at the deal's terms, according to people familiar with the situation not authorized to speak publicly.
Meanwhile, the National Association of Realtors yesterday confirmed that the housing market is far from recovery when it reported that sales of existing homes dropped 3.8 percent in June to the slowest rate in more than 4 years.
Even though median prices had their first gain in 11 months, the sales figure was worse than analysts expected, and followed data from the Mortgage Bankers Association showing mortgage applications fell for the first time in four weeks to a five-month low.
"It's an open-ended unknown, and that's the problem," said Richard E. Cripps, chief market strategist for St. Louis-based broker Stifel Nicolaus.
In late afternoon trading, the Dow Jones industrial average rose 74.22, or 0.54 percent, to 13,791.17, after trading up more than 100 points and down more than 40.
Broader stock indicators also rose. The Standard & Poor's 500 index climbed 8.72, or 0.58 percent, to 1,519.76, and the Nasdaq composite index rose 11.76, or 0.45 percent, to 2,651.62.
The Russell 2000 index of smaller companies fell 7.59, or 0.93 percent, to 804.27.
Despite the gains in the major indexes, declining issues outnumbered advancers by about 10 to 7 on the New York Stock Exchange, where volume came to 1.67 billion shares.
Treasury bonds rose after the weak housing data prompted investors to buy safe government assets. As bond prices rose, the yield on the benchmark 10-year Treasury note fell to 4.91 percent from 4.95 percent late Tuesday.
Light, sweet crude for September delivery rose $2.32 to $75.88 a barrel on the New York Mercantile Exchange, bouncing back from two straight days of steep declines after the U.S. government yesterday said crude oil supplies fell last week.
Boeing was the biggest gainer in the Dow, rising $3.56, or 3.4 percent, to $107.36. The plane manufacturer posted a $1.1 billion profit in the second quarter, up from a year-ago loss, as it gets closer to overtaking its European rival Airbus in deliveries.
And Amazon.com surged $17.48, or 25 percent, to $86.73, after the Web retailer said its second-quarter profit more than tripled on strong sales of books, music and electronics worldwide.