Stocks surge amid financial-sector relief
NEW YORK » Wall Street soared for the second straight day yesterday, rallying in the last hour of trading after a rebound in financial stocks and optimism about private sector jobs.
Investors brushed off a sharp jump in oil prices. The Dow Jones industrials rose more than 180 points, bringing its two-day gain to more than 450.
Bank and brokerage stocks, many trading at multiyear lows, turned higher and led the late advance. There was some relief in the market after the Federal Reserve said it would extend and expand its program to lend money to investment banks. The central bank's move reassured the market that the banks would have cash if they needed it.
Investors have been worried that some of Wall Street's biggest names will be slashing prices on more of their assets -- and needing more money -- after Merrill Lynch & Co. unexpectedly announced a $5.7 billion write-down late Monday.
"There's a growing sense that what we saw out of Merrill Lynch is the beginning of the end for the financial cleanup," said Craig Peckham, market strategist at Jefferies & Co.
Earlier, Automatic Data Processing said private sector employment rose by 9,000 this month. After seeing jobs disappear by the thousands in recent months, the stock market is eager for any insights into the Labor Department's take on the job market on Friday.
The ADP news helped offset a big spike in the price of oil after a weekly Energy Department report on domestic supplies showed a surprise increase. Israeli Prime Minister Ehud Olmert's announcement that he plans to resign in September stirred concerns about the viability of Middle East peace efforts and rising tensions with Iran.
Light, sweet crude rose $4.58 to settle at $126.77 on the New York Mercantile Exchange. Oil has fallen sharply, however, since hitting a high above $147 on July 11. A drop in oil prices Tuesday contributed to a huge gain on Wall Street.
The late rally may also have been due to technical trading; in times of great volatility, many institutional investors start adjusting their holdings before the closing bell.
The Dow rose 186.13, or 1.63 percent, to 11,583.69. On Tuesday, the blue chips jumped 266 points, more than wiping out a nearly 240-point loss from the previous session.
Broader stock indicators also surged. The Standard & Poor's 500 index advanced 21.06, or 1.67 percent, to 1,284.26, and the Nasdaq composite index rose 10.10, or 0.44 percent, to 2,329.72.
Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where consolidated volume came to 5.06 billion shares from 5.11 billion in the previous session.
The Russell 2000 index rose 4.31, or 0.60 percent, to 718.86.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 4.05 percent from 4.04 percent late Tuesday.
The dollar was higher against other major currencies, while gold prices fell.