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Stock market claws its way back up
Question of the Day
NEW YORK (AP) — Wall Street rose yesterday on some strong earnings and new deals, but not without a struggle, as mounting signs of a tougher lending climate again dogged investors.
The stock market, coming off Tuesday”s 226-point tumble in the Dow Jones Industrial Average, seesawed throughout yesterday”s session. Ultimately, it drew confidence from better-than-expected quarterly profits at Web retailer Amazon.com Inc. and plane manufacturer Boeing Co., and acquisitions involving German engineering company Siemens AG and drug maker Merck & Co.
Still, some investors worry that deteriorating lending conditions will stem this year”s heavy stream of deal making. Buyouts usually involve taking on debt, and yesterday, the banks raising funds for the turnaround of Chrysler Group had to postpone a $12 billion debt offer after investors balked at the deal”s terms, according to people familiar with the situation who were not authorized to speak publicly.
In the Federal Reserve“s region-by-region survey released yesterday, the economy registered modest growth in the early summer, despite how consumers and some businesses were buffeted by both high gasoline prices and the sour housing market.
The survey also showed the economy clearly has emerged from a rut at the beginning of the year and is now growing, albeit slowly.
On the inflation front, consumer prices continued to increase “at a moderate rate,” the Fed report said.
“Almost every region said that oil and gasoline prices were either rising, high or an issue,” it noted. Gas prices have climbed past $3 a gallon nationwide.
Fed Chairman Ben S. Bernanke told Congress last week that he expects the economy to grow gradually throughout the course of this year and to strengthen a bit next year. He said inflation remains the chief concern.
Information from the Fed survey will figure into discussions at the central bank”s next meeting, Aug. 7. Economists predict that the Fed at that time will again vote to hold a key interest rate at 5.25 percent, where it has stood for more than a year.
Wall Street, now at the peak of second-quarter earnings season, has been extremely volatile lately. For seven straight sessions, the market has risen one day, fallen the next, then risen again. Over that span, the Dow has lost 165.91 points, or 1.2 percent.
The market will likely remain rocky as investors try to assess whether problems related to home lending will hurt the broader economy.
The Dow rose 68.12, or 0.50 percent, to 13,785.07, after trading up more than 100 points and down more than 40.
Broader stock indicators also rose in shaky trading. The Standard & Poor”s 500 index climbed 7.05, or 0.47 percent, to 1,518.09, and the Nasdaq Composite index advanced 8.31, or 0.31 percent, to 2,648.17.
Despite the gains in the major indexes, declining issues outnumbered advancers by about 10 to 7 on the New York Stock Exchange, where volume came to 2.03 billion shares, up from just under 2 billion yesterday.
By Mark Davis
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