Stocks sink; banks rise on BofA deal

The rest of the market also turned lower. Oil fell and Treasurys rose after the government said more people hit the unemployment line last week.

Apple Inc., the world’s largest technology company, fell less than 1 percent after CEO Steve Jobs resigned late Wednesday. Mr. Jobs‘ departure was expected because of his health problems. Richard Gardner at Citigroup recommended investors buy the stock.

BofA jumped 9 percent. The troubled bank lost half its value this year as investors grew worried about its need to raise capital and its liabilities related to subprime mortgages.

Other banks also rose after the billionaire investor lent his credibility to Bank of America. Morgan Stanley and Citigroup Inc. both rose more than 3 percent. BofA and American Express Co. were the only companies in the Dow to rise.

This week’s trading has been marked by a series of sudden reversals. Robert Stein, a money manager responsible for $1.2 billion at Astor Asset Management, said questions about the economy have made investors uncertain and the stock market more volatile. Gains made one day can quickly disappear the next.

“We’re not seeing anything that’s convincingly bearish enough to call another recession, but nothing optimistic enough to suggest that a recovery is going to regenerate,” he said.

Earlier Thursday, the government reported an increase in the number of first-time claims for unemployment benefits last week. The Labor Department said applications for benefits rose to 417,000, the highest in five weeks. The figure was inflated by a strike at Verizon, which ended earlier this week.

The S&P 500 index, the benchmark for most money managers, has gained more than 3 percent this week but is still down 10 percent this month. The Dow rose 503 points in the first three days of this week. It’s down 8 percent this month.

Paul Zemsky, chief investment officer of ING Investment Management in New York, said this week’s gains were a result of investors’ bargain-hunting after stocks fell too far over the past month, and traders who bet against the market cashing in their winnings.

Mr. Zemsky expects to see more big swings as long as the fear of recession hangs over the market. “People are trying to adjust their positions to news,” he said. “Once it’s clear where the economy is headed, I think things will calm down.”

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