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Late-day rally sends stocks higher; Dow rises 143
NEW YORK — It was another day of big swings in the stock market.
The Dow Jones industrial average ended with a gain of 143 points Thursday. On its way there, it surged 260 points shortly after the opening bell, then turned mixed for much of the day. A burst of buying in the last half-hour of trading sent the Dow shooting higher again.
Financial stocks had the biggest gains. Traders were relieved that Germany passed a measure to expand the powers of a regional bailout fund. That eased worries that U.S. banks could be buffeted by another bout of turmoil in Europe’s financial system. Travelers Cos. Inc. and Bank of America Corp. led the Dow average higher.
Investors struggled to make sense of conflicting reports on the economy. First-time applications for unemployment benefits fell to a five-month low. The government also raised its estimate of economic growth in the April-June period.
Other economic reports were weak. A trade group reported that chief executives of the nation’s largest companies are more pessimistic than they were just three months ago. Also, fewer Americans signed contracts to buy homes in August, the second straight month of declines.
All of that contributed to another day of ups and downs on the stock market. The Dow Jones industrial average rose 143.08 points, or 1.3 percent, to close at 11,153.98. Travelers led the Dow with a gain of 3.2 percent; Bank of America was close behind, rising 3.1 percent.
The Standard & Poor’s 500 index rose 9.34 points, or 0.8 percent, to 1,160.40. Financial stocks rose 2.8 percent, the most of the 10 company groups that make up the S&P.
Technology companies lagged the rest of the market. The Nasdaq composite index lost 10.82 points, or 0.4 percent, to 2,480.76.
Advanced Micro Devices Inc. plunged 13.7 percent, the most of any stock in the S&P 500, after the company cut its revenue and earnings forecast for the third quarter, saying it was having problems getting its chips made.
Retailers and other consumer discretionary stocks also tanked as investors avoided companies that would be most susceptible to an economic downturn. Netflix Inc. fell 11 percent, Tiffany & Co. fell 6.9 percent and Coach Inc. fell 6.1 percent.
Analysts said financial markets were likely to remain volatile until more questions were resolved about Europe’s debt crisis and the U.S. economy. “Until we start to see more clarity on policy intervention, we’ll continue to see this intraday, manic market reaction,” said James Dailey, chief investment officer of TEAM Financial Managers Inc.
The measure approved by German lawmakers to expand the region’s bailout fund must be approved by all 17 countries that use the euro. The plan will allow the bailout fund to buy government debt and lend money to troubled European countries. Finland approved the measure Wednesday.
Analysts cautioned that bank stocks remain vulnerable if Europe stumbles in its efforts to contain its debt crisis. “Investors need to be very careful, because there is still a vast labyrinth of potential challenges that remain to be cleared with regard to Europe,” said Frank Barbera, a portfolio co-manager of the Sierra Core Retirement Fund.
About three stocks rose for every one that fell on the New York Stock Exchange. Volume was average at 4.5 billion shares.
By Donald Lambro
Growth spikes are little more than trend-free anomalies
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