Stocks move higher in volatile trading
NEW YORK » Stocks rose yesterday when investors found solace in the European Central Bank's $500 billion loan issuance and profit gains at Goldman Sachs and Best Buy, but the possibility of recession in 2008 made for a back-and-forth session.
The ECB's massive 16-day tender supported the idea that the world's central banks are working to revive demand in struggling areas of the credit market.
The Bank of England also said it will offer additional reserves to lenders yesterday, after the U.S. Federal Reserve Monday auctioned off $20 billion in 28-day credit.
Few are calling the end of the credit crunch just yet, though, and the market's seesaw movements on yesterday reflected its uncertainty. Alongside U.S. government data showing that new home construction dropped in November to its lowest rate in more than 16 years, the central banks' actions had a hard time galvanizing a market that remains anxious that the economy has further to fall.
"It's very disconcerting that we're getting central bank interventions for a problem that many were hoping would be a self-contained one," said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co.
Meanwhile, cautious forward-looking comments by Goldman Sachs Group Inc. and Best Buy Co. dampened the market's enthusiasm over the companies' better-than-expected quarterly earnings.
"The credit issues, the liquidity issues, are still there," said Ryan Detrick, strategist at Schaeffer's Investment Research. "There's a dark cloud over the market."
According to preliminary calculations, the Dow Jones industrial average rose 65.27, or 0.50 percent, to 13,323.47, after gaining as many as 112 points, tumbling by 75 points, and then rebounding.
Broader stock indicators also bounced back from a midday slump.
The Standard & Poor's 500 index rose 9.07, or 0.63 percent, to 1,454.97, and the Nasdaq composite index rose 21.57, or 0.84 percent, to 2,596.03.
The Russell 2000 index of smaller companies rose 15.00, or 2.03 percent, to 754.06.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to 1.49 billion shares compared with 1.44 billion traded Monday.
The dollar rose against other major currencies and gold prices also advanced.
Light, sweet crude fell 14 cents to $90.49 a barrel on the New York Mercantile Exchange.
Government bonds rose yesterday. The yield on the 10-year Treasury note, which moves opposite its price, slipped to 4.12 percent from 4.15 percent late Monday.
Goldman fell $7.12, or 3.4 percent, to $201.51 after releasing its earnings report, which showed a 2 percent profit gain but uneven results across the investment bank's various units.
Best Buy fell 48 cents to $51.62 after the electronics retailer posted a 52-percent profit gain but offered an outlook that came in below analysts' expectations.