Mortgage subsidies news helps buoy stocks


POSTED: Friday, February 13, 2009

NEW YORK » The stock market has made a late-day comeback, hoping that homeowners will get more help with their mortgages.

A Reuters report that the government plans to subsidize troubled homeowners' mortgage payments helped the Dow Jones industrial average pare sharp losses yesterday afternoon and finish down less than 7 points. The Federal Housing Finance Agency declined to comment on the report.

The idea of targeted help for homeowners impressed investors more than the government's $789 billion economic stimulus package and its revised plan to bail out problem banks.

This week has been a turbulent one for stocks, which rallied last week in anticipation of the stimulus package and the financial bailout plan. That rally was erased Tuesday after Treasury Secretary Timothy Geithner said the government will boost lending, determine which banks should get extra funding, and remove toxic assets from banks' books - but he provided few details about how the plans would work.

The Dow Jones industrial average slipped 6.77, or 0.09 percent, to 7,932.76, after falling by more than 245 points in earlier trading. The blue-chip index got within 142 points of its Nov. 20 close of 7,552.29, which was a five-and-a-half year low.

Broader stock indicators ended higher. The Standard & Poor's 500 index rose 1.45, or 0.17 percent, to 835.19, and the Nasdaq composite index rose 11.21, or 0.73 percent, to 1,541.71.

Declining issues outnumbered advancers by about 8 to 7 on the New York Stock Exchange, where volume came to 1.48 billion shares.

Government bond prices were mostly lower. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.79 percent from 2.76 percent late Wednesday. The yield on the three-month T-bill fell to 0.28 percent from 0.29 percent.

The dollar rose against other major currencies, and gold prices also climbed.

Economic data was mixed Thursday.

The U.S. Commerce Department said Thursday that retail sales jumped 1 percent in January, the biggest increase in 14 months, after a 2.7 percent drop in December. Economists polled by Thomson Reuters had predicted that sales fell 0.8 percent last month.

Meanwhile, the U.S. Labor Department said first-time claims for unemployment benefits dropped to a seasonally adjusted 623,000, from an upwardly revised figure of 631,000 the previous week.