Stocks rise after signs of credit market relief
NEW YORK » Stocks managed to notch a modest gain yesterday, with Wall Street cautious ahead of today's jobs report but hopeful that the global financial system is on the mend.
Federal Reserve Chairman Ben Bernanke told Congress today the Fed expects to recover most, if not all, the $29 billion worth of loans it made to keep struggling Bear Stearns Cos. from collapse. Bernanke's remarks, in which he defended the central bank's decision to aid JPMorgan Chase & Co.'s buy of Bear Stearns, were calming to investors hoping that demand is returning to the tight credit markets.
John Thain, the chief executive of Merrill Lynch & Co., also lent some solace to the market after telling the Nikkei, a Japanese financial newspaper, that the investment bank has sufficient cash and will not need to raise more.
Early yesterday, stocks dipped only briefly after the Labor Department reported a spike in jobless claims to a level not seen since September 2005.
"I think that the desire to sell is coming off," said Thomas J. Lee, equities analyst at JPMorgan. The fact that the market has not been shaken by recent disappointing economic data "tells me that the recession is largely discounted."
"The Dow Jones industrial average rose 20.20, or 0.16 percent, to 12,626.03.
Broader stock indicators also edged higher. The Standard & Poor's 500 index rose 1.78, or 0.13 percent, to 1,369.31, and the Nasdaq composite index rose 1.90, or 0.08 percent, to 2,363.30. The Russell 2000 index of smaller companies rose 1.30, or 0.18 percent, to 713.57.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange. Consolidated volume came to 3.77 billion shares, down from 4.19 billion shares Wednesday.
The Dow, which shot up nearly 400 points on Tuesday, is up 7.6 percent from its March 10 low, its worst level since October 2006.
"You're going to continue to see weak economic data. That doesn't mean stocks are going to come down," said Bill Stone, chief investment strategist for PNC Wealth Management.
Government bonds rose slightly. The yield on the 10-year Treasury note, which moves opposite its price, fell to 3.59 percent in late trading from
3.60 percent late Wednesday.
Crude oil fell $1 to $103.83 a barrel on the New York Mercantile Exchange, after a surge a day earlier on the prospect of climbing demand for gasoline.
The dollar was mixed against other major currencies, while gold rebounded back above $900 an ounce.
Investors got a bit of relief from the Institute for Supply Management. The ISM said yesterday the services sector contracted only slightly in March a stronger performance than in February, and a better reading than many economists predicted.
In corporate news, Schering-Plough Corp. announced late yesterday it plans to cut jobs to offset continued sales declines of its cholesterol drug Vytorin. Schering-Plough shares soared $1.52, or 11 percent, to $15.38; they had fallen sharply earlier in the week after news that medical researchers were recommending against use of the drug.
Cisco Systems Inc., meanwhile, dropped 73 cents, or
2.9 percent, to $24.23 due to an analyst downgrade, citing softening demand.