Stocks rebound from sharp sell-off
NEW YORK » Wall Street capped a week of remarkable volatility with a big advance yesterday that left stocks higher for the week but didn't silence all of investors' concerns about the economy and the financial system.
Bargain-hunting and a milder-than-expected drop in a regional manufacturing report helped leaven stocks yesterday. The Dow Jones industrial average rose about 260 points on the day, giving the blue chips a gain of more than 3 percent for the week. Broader indexes finished the week with gains of 2 percent to 3 percent. The markets are closed for Good Friday.
A week that opened with fearful questions over the soundness of the financial system following the near collapse of Bear Stearns Cos. ended on a more upbeat note, thanks in part to the Federal Reserve's efforts to inject both liquidity and calm into the markets.
But while many investors praised the Fed's unusual steps -- an interest rate cut and several other steps aimed at oiling the troubled credit markets, including the deal it brokered for JPMorgan Chase & Co. to buy a liquidity-starved Bear Stearns for a fraction of its value only a week ago -- many on Wall Street still hung onto some misgivings about the banking system and the economy.
The Labor Department said the number of newly laid off workers filing for unemployment benefits rose last week by a more-than-anticipated 22,000 to 378,000.
But another day of sharp declines in commodities prices gave investors some hope that lower energy and food prices might boost consumers' discretionary spending and ease inflation concerns. Crude oil fell, while gold prices declined sharply.
Still, the markets are apt to stay volatile for some time, as investors digest news on the economy and the troubled financial sector.
"It's the every-other-day theory -- up one day, and down the next," said Scott Brown, chief economist at Raymond James & Associates.
The Dow yesterday rose 261.66, or 2.16 percent, to 12,361.32, and gained 3.43 percent for the week.
Broader stock indicators also advanced. The Standard & Poor's 500 index rose 31.09, or 2.39 percent, to 1,329.51, and the Nasdaq composite index rose 48.15, or 2.18 percent, to 2,258.11. The Russell 2000 index of smaller companies rose 17.29, or 2.60 percent, to 681.42.
For the week, the S&P rose 3.21 percent, while the Nasdaq gained 2.06 percent and the Russell 2000 finished up 2.79 percent.
Advancing issues outnumbered decliners by about 3 to 1 on the New York Stock Exchange, where consolidated volume came to a heavy 6.12 billion shares compared with 5.3 billion shares traded Wednesday.
Bond prices rose yesterday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.34 percent from 3.41 percent late Wednesday.
The dollar rose against some other major currencies.
Light, sweet crude fell 70 cents to settle at $101.84 on the New York Mercantile Exchange.
Gold also declined, hitting a one-month low as the stronger dollar helped quell some inflation concerns and led investors to exit some hard assets. Gold fell $25.10 to settle at $919.60 an ounce on the Nymex.