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Stocks Rally, Europe Debt Worries Ease 09/08 17:28
Stocks resumed their rally Wednesday after a successful auction of
Portuguese government debt eased worries about Europe's financial system.
NEW YORK (AP) -- Stocks resumed their rally Wednesday after a successful
auction of Portuguese government debt eased worries about Europe's financial
system.
The Dow Jones industrial average gained 46 points, and broader indexes also
rose. European markets reversed their losses after the results of the auction
were announced.
Major indexes pulled back from their highs in the afternoon after the
Federal Reserve said more regions of the country saw slower growth late in the
summer. The Fed's "beige book" report on regional economic activity showed five
of the 12 regions tracked by the Fed showed mixed or slowing activity compared
with just two during the most recent report in July.
JPMorgan Chase & Co. and other banks led the market higher, reversing a
downturn from the day before. Stocks had fallen on Tuesday, breaking a four-day
winning streak, following news reports that European banks held larger amounts
of risky government debt on their books than had previously been disclosed.
Energy stocks rose after Fitch Ratings raised its credit rating of BP. BP
also released an internal report that largely spread blame from the oil spill
in the Gulf of Mexico to rig owner Transocean Ltd. and contractor Halliburton
Co. as well as itself.
The Dow Jones industrial average gained 46.32, or 0.5 percent, to close at
10,387.01. The Dow had been up as much as 86 points earlier in the day before
paring those gains after the Fed's regional economic report came out.
The S&P 500 index rose 7.03 or 0.6 percent, to 1,098.87, while the Nasdaq
rose 19.98, or 0.9 percent, to 2,228.87
The two-day swing based on the ebb and flow of European debt fears fit into
a pattern of jittery trading in recent weeks in response to economic news.
"There seems to be a fixation on the latest news and data," said Mike
McGervey, president of McGervey Wealth Management. Mixed economic news has
helped keep stocks stuck in a tight range in recent weeks.
European markets rose. Britain's FTSE 100 rose 0.4 percent, Germany's DAX
index gained 0.8 percent, and France's CAC-40 rose 0.9 percent.
About two stocks rose for every one that fell on the New York Stock
Exchange, where consolidated volume was low at 3.3 billion shares.
Volume remains very thin, which means many traders are avoiding stocks
altogether. Many investors are waiting to get a better sense of the pace of
recovery and to see what might happen during November's elections.
Rick Fier, an equities trader at Conifer Securities, said the elections more
than the economy are likely to be the catalyst that moves the market higher in
the coming months. Traders are assuming that the recovery will be slow and
uneven, but growth will remain in place over the next few months, he said.
Uncertainty about potential tax increases and the costs associated with
health care and financial regulatory reform have helped to keep businesses from
hiring, which in turn has slowed the recovery. The results of the elections
should provide businesses and investors with a clearer sense of those issues.
In corporate news, women's clothing retailer Talbots Inc. said its fiscal
second quarter profit rose, but its outlook for the third quarter fell short of
expectations. Shares dropped 14 cents to $10.97 on the cautious outlook.
BP shares rose $1.18, or 3.2 percent, to $38.37. Halliburton rose 37 cents
to $30.21. JPMorgan Chase rose 86 cents, or 2.3 percent, to $39.14.
Treasury prices bounced off their lows after an auction for 10-year notes
was well received by investors. The yield on the 10-year Treasury note, which
moves opposite its price, rose to 2.66 percent from 2.60 percent late Tuesday.
Its yield helps set interest rates on mortgages and other loans.
(KM)
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