Stocks shoot higher on reassuring news
NEW YORK » Wall Street shot higher yesterday, lifting the Dow Jones industrials nearly 320 points after reassuring news from Goldman Sachs Group Inc. and Wal-Mart Stores Inc. quelled some of the market's worst fears about the credit crisis and the economy. A plunge in the price of oil gave investors further incentive to buy.
Goldman Sachs heartened investors with word that it didn't expect a significant hit from the subprime mortgage turmoil. Goldman Chief Executive Lloyd Blankfein said the bank has a short position in the subprime mortgage market and won't be taking any significant charges to write off losses.
Goldman's news helped offset an announcement from Bank of America Inc., which said it will record $3 billion in pretax writedowns in the fourth quarter.
Meanwhile, Wal-Mart, the world's largest retailer, reported third-quarter profit surpassed projections and hinted that consumer spending might be stronger than anticipated this holiday shop- ping season. The results also showed that heavy discounting during the period did not hurt margins, which the company said bodes well for the fourth quarter.
A sharp pullback in energy prices also encouraged Wall Street. Oil prices plummeted after the International Energy Agency reduced its expectations for demand in the fourth quarter and next year and said crude supplies are growing. Light, sweet crude for December delivery fell $3.45 to settle at $91.17 a barrel on the New York Mercantile Exchange.
The Dow rose 319.54, or 2.46 percent, to 13,307.09. A day earlier, a turbulent session pushed the Dow below 13,000 for the first time since August.
Yesterday's advance snapped a four-day losing streak for the blue chip index.
Broader indexes also rose sharply yesterday. The Standard & Poor's 500 index jumped 41.86, or 2.91 percent, to 1,481.04, and the Nasdaq composite index gained 89.52, or 3.46 percent, to 2,673.65.
"Over the last week there has been so much bloodshed on the Street, it's finally enticed people back to the market," said Ryan Larson, senior equity trader at Voyageur Asset Management. "At some point, it's hard to turn your head when all these issues become so cheap."
Bonds fell as investors moved back into stocks. The yield on the benchmark 10-year Treasury note rose to 4.26 percent from 4.22 percent late Friday. The bond market was closed Moday in observance of Veterans Day.
Gold prices declined. The dollar was mixed.
Investors were expected to position their portfolios ahead of key economic data out during the week. Two key barometers of inflation and the economy will be released, with the U.S. Labor Department's Producer Price Index today and the Consumer Price Index tomorrow.
Goldman shares gained $18.33, or 8.5 percent, to $233.04, while Bank of America added $2.29, or 5.2 percent, to $46.27. Wal-Mart spiked $2.65, or 6.1 percent, to $45.97. Home Depot Inc., which reported third-quarter results fell 26.8 percent because of the housing slump, rose 66 cents, up 2.3 percent, to $29.12.