Wall Street shoots back up
POSTED: Thursday, November 13, 2008
NEW YORK » Wall Street launched a massive rebound yesterday, muscling the Dow Jones industrial average up nearly 553 points after driving it down near its lows for the year, as investors decided they did not want to miss out on cheap stocks.
After three days of selling that wiped out about $1 trillion in shareholder value, many investors, though nervous about the economy, appeared convinced the market had priced in enough bad news. So when the Standard & Poor's 500 index managed to recover from multiyear trading lows, investors swarmed back in.
It's "a herd mentality," said Ryan Larson, senior equity trader at Voyageur Asset Management. "We started going higher—and you don't want to be the last one on the boat."
Some analysts also said investors were positioning themselves ahead of a meeting of Group of 20 leaders in Washington. The meeting could bring decisions on mending the troubled global financial system.
As stocks rallied, so did oil prices, sending shares of energy companies higher.
The biggest gainer among the 30 Dow companies was Chev-ron Corp., which rose $8.43, or 12.5 percent, to $75.71.
Another big gainer was Exxon Mobil Corp., which climbed $6.48, or 9.4 percent, to $75.41; these two energy stocks represented one-fifth of the Dow's point gain yesterday.
Stocks sold off early after the U.S. Labor Department said the number of newly laid-off individuals seeking unemployment benefits jumped last week to the highest level since right after the Sept. 11, 2001 terrorist attacks.
There also was more evidence of a severe pullback in consumer spending—a worsening trend that had pummeled stocks earlier in the week.
Wal-Mart Stores Inc. trimmed expectations for full-year earnings, and Intel Corp. late Wednesday cut more than $1 billion from its sales forecast.
The Dow rose 552.59, or 6.67 percent, to 8,835.25, after falling as low as 7,965.42 and rising as high as 8,876.59. That's a trading range of 911 points.
The Dow did not sink below its Oct. 10 trading low of 7,882.51.
The Dow's nearly 553-point gain was the third-largest single-session point gain on record, following the 889-point rise on Oct. 28 and the 936-point surge on Oct. 13.
The Standard & Poor's 500 index rose 58.99, or 6.92 percent, to 911.29, after falling to 818.69—well below its intraday low of 839.80 on Oct. 10. The Nasdaq composite index rose 97.49, or 6.50 percent, to 1,596.70.
The Russell 2000 index of smaller companies rose 38.43, or 8.5 percent, to 491.23.
The price of a barrel of light, sweet crude rose $2.08 to $58.24 on the New York Mercantile Exchange.
The three-month Treasury bill's yield rose to 0.20 percent from 0.13 percent late Wednesday, and the yield on the benchmark 10-year Treasury note rose to 3.88 percent from 3.67 percent late Wednesday. Higher yields indicate lower demand.
The dollar was mixed against other major currencies. Gold prices rose.