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Dow gains 401 points as oil prices decline

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The prospect of cheaper oil and cheaper money helped Wall Street buck the global market trend and post sharp gains Thursday, as a late rally put U.S. stock markets in the black after two days of sharp losses.

Continuing a string of extraordinarily volatile trading days, the Dow Jones Industrial Average gained 401 points, or 4.7 percent, to close at 8,979, after losing 733 points Wednesday and being down nearly 400 points early in the day. The broader Standard & Poor's Index rose 38.59 points, or 4.3 percent, to 946.43.

Analysts said the market was buoyed by news that the price of oil had fallen below $70 a barrel for the first time since the summer of 2007 and by a string of economic reports suggesting that another interest rate cut may be coming.

World oil prices slumped in the face of falling global demand and a new U.S. government report that showed domestic stockpiles had increased more than twice as fast as forecast.

The lower oil prices could mean the national average for a gallon of gas at the pump could fall below $3 by the weekend, according to a survey by AAA, the Oil Price Information Service and Wright Express.

Treasury Secretary Henry M. Paulson Jr. said in a television interview that he was less focused on the stock market gyrations than on the world's frozen credit markets. There were signs the Bush administration's decision this week to pump $125 billion into nine major U.S. banks had helped, he said.

"You don't want to react too much to the equity market any single day," Mr. Paulson told Bloomberg Television. "But if you look at the credit spreads, if you look at some of the indicators that I look at every day, there's no doubt in my mind we've done the right things."

Before U.S. markets rallied, leading Asian and European markets had lost ground in trading earlier in the day.

The FTSE 100 Index of leading British shares closed down 218.20 points, or 5.4 percent, at 3,861.39, while Germany's DAX was 238.82 points, or 4.9 percent, lower at 4,622.81. The CAC-40 in France was 200.07 points lower, or 5.9 percent, at 3,181.00.

The losses were even worse in Asia, as Tokyo's benchmark Nikkei 225 stock average slid 906 points, or 9.5 percent, to 8,641. South Korea's Kospi was down 8.4 percent, Australia's benchmark was off almost 7 percent and Singapore's index lost about 6 percent.

New Japanese Prime Minister Taro Aso blamed the market's slide on what he called the "insufficient" U.S. plan to provide up to $700 billion to rescue Wall Street and get banks lending again.

The White House announced that President Bush would make his first extended public remarks on the new bailout strategy in a speech Friday morning to the U.S. Chamber of Commerce - before U.S. markets open.

The latest government numbers indicate that the financial crisis had already begun to take its toll on the larger economy. But traders said the bad news came with a silver lining, in that it may give the Federal Reserve leeway to cut interest rates again in a bid to jump-start the economy.

The Labor Department reported that the key inflation indicator, the Consumer Price Index, was flat for September after August's 0.1 percent decline.

The Federal Reserve reported Thursday that U.S. industrial production in September posted its sharpest monthly decline since 1974. The 2.8 percent drop was substantially greater than forecasters had expected.

"Over the last three months, production is down 5.8 percent and is consistent with a recession," Wachovia Corp. Chief Economist John Silvia said in a note to clients.

• This article was based in part on wire-service reports.

About the Author
David R. Sands

David R. Sands

Raised in Northern Virginia, David R. Sands received an undergraduate degree from the University of Virginia and a master’s degree from the Fletcher School of Law and Diplomacy at Tufts University. He worked as a reporter for several Washington-area business publications before joining The Washington Times.

At The Times, Mr. Sands has covered numerous beats, including international trade, banking, politics ...

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