Wall St. opens higher after day of selling

UPDATED:

NEW YORK (AP) – Stocks opened higher Thursday after IBM Corp. affirmed its profit forecast and investors hoped the government might take ownership stakes in banks to help stabilize the financial industry.

Investors also looked to recover from near-panic selling that cascaded through global markets in the past week. Stocks around the world moved mostly higher one day after the Federal Reserve and other leading central banks cut interest rates to help unclog the credit markets and stimulate the global economy.

There’s some hope by investors that Wall Street is getting closer to finding a bottom after the worst six-day rout in years. On Wednesday, the Dow gave up 189 points to close at 9,258.10 and was down about 35 percent from its high of 14,164.53 reached exactly one year ago.

“I think the base driver today is that we’re oversold,” said Arthur Hogan, chief market analyst at Jefferies & Co. “You can’t do that too long before things turn around, and I think the bottom of this market gets put in this week.”

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While a rate cut can take up to a year to work its way through the economy, there were some positive signs Thursday that corporate earnings might come in better than expected. IBM, one of the 30 stocks that make up the Dow Jones industrials, posted third-quarter results that beat forecasts and affirmed its full-year earnings forecast after the markets closed on Wednesday.

Investors also appeared cheered by a plan being considered by the Bush administration to invest in hobbled U.S. banks as a way to stabilize the financial sector. An administration official, who asked not to be identified because no decision has been made, said the $700 billion rescue package passed by Congress last week allows the Treasury Department to inject fresh capital into financial institutions and obtain ownership shares in return.

Britain rolled out a similar plan, though no U.K. bank has received any investments. In Iceland, the government now has control of all three of the country’s major banks as it struggles to contain the troubles there.

Late Wednesday, the U.S. government again came to the rescue of American International Group Inc. The Fed agreed to lend $37.8 billion to the ailing insurer, which is on top of an $85 billion loan AIG received last month.

Wall Street also gained some confidence after the government reported applications for unemployment benefits dropped last week from a seven-year high. The Labor Department’s report matched projections, though claims still remain at elevated levels.

In the first half-hour of trading, the Dow Jones industrial average rose 145.93, or 1.55 percent, to 9,402.03.

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