- The Washington Times - Wednesday, February 28, 2007

NEW YORK (AP) — Stocks searched for stability Wednesday after the previous session’s 416-point plunge in the Dow industrials, as investors digested a barrage of economic data and found some comfort in Federal Reserve Chairman Ben Bernanke’s comment that no single trigger was responsible for Tuesday’s selloff. In early afternoon, the Dow Jones industrials were up 41.90, or 0.34 percent, at 12,258.14 after being up more than 100 points earlier in the session.

Broader stock indicators were also higher. The Standard & Poor’s 500 index was up 6.68, or 0.48 percent, at 1,405.72, and the Nasdaq composite index was up 6.85 percent, or 0.28 percent, at 2,414.71.

Bernanke’s remarks that he still expects “moderate growth” in the economy gave some investors confidence to look for bargains Wednesday. A recovery in some markets following a worldwide selloff Tuesday also lent some support to U.S stocks, although the major indexes fluctuated through the morning and into early afternoon.

Stocks rose after Bernanke testified on Capitol Hill and allayed some of the fears about a slowdown in the U.S. and Chinese economies that fed Tuesday’s drop. His remarks followed comments from former Fed Chairman Alan Greenspan over the weekend warning that a U.S. recession could take hold later this year.

Tuesday’s decline, which followed a nearly 9 percent decline in the Shanghai Composite Index on Tuesday, left many stocks looking more attractively priced.

“I thought on Monday and I think even more today that the stock market offers good value and that it will move higher for the year,” said Ed Keon, chief investment strategist at Prudential Equity Group.

Bonds fell as stocks tried to recoup some losses. The yield on the benchmark 10-year Treasury note rising to 4.55 percent from its low for the year of 4.47 percent late Tuesday.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude fell $1.04 to $60.42 on the New York Mercantile Exchange.

The market took some solace from a Commerce Department report that the U.S. economy grew at an annual rate of 2.2 percent in the fourth quarter. The gross domestic product reading was slightly below expectations, but not enough to puncture Wednesday’s nascent recovery. The reading was more than a percentage point below the initial estimate of 3.5 percent made a month ago.

In other economic news, the National Association of Purchasing Management-Chicago index of business conditions in the Midwest showed a weaker-than-expected reading. The February figure fell to 47.9 from 48.8 in January. The report is often viewed as a bellwether for the Institute for Supply Management’s index of manufacturing activity for February, which is due Thursday.

Also, a Commerce Department report found new-home sales fell by 16.6 percent in January from the previous month, the largest drop in 13 years.

Investors appeared to look past comments from New York Federal Reserve President Timothy Geithner, who said early Wednesday the Federal Reserve should take steps to help the markets withstand shocks, such as those that occurred Tuesday.

In corporate news, Fremont General Corp. fell $1.54, or 13.2 percent, to $10.11 after the mortgage lender warned it would delay the release of its fourth-quarter report, which had been set for Wednesday. The company also plans to delay filing its annual report.

Procter & Gamble Co. bounced back Wednesday after taking a tumble a day earlier. The world’s largest consumer products company rose $2.16, or 3.5 percent, to $63.41 on talk it would proceed with its plans to issue $1.4 billion in 30-year bonds.

Merck & Co. also regained some territory after issuing a first-quarter profit outlook that surpassed the current estimates of Wall Street analysts, and raised its forecast for the year. The drugmaker rose 86 cents to $44.02.

Most U.S.-listed Chinese companies recovered at least some of their huge losses from Tuesday. Internet company Baidu.com Inc. rose $1.19 to $105.95, while Shanda Interactive Entertainment Ltd., which develops online games, rose 80 cents, or 3.5 percent, to $23.42.

Most sectors saw investors buying back in on Wednesday, but homebuilders saw additional selling, due in large part to the Commerce Department report that new-home sales plunged in January by the largest amount in 13 years.

Toll Brothers Inc. fell 67 cents, or 2.2 percent, to $29.91; D.R. Horton Inc. dropped 22 cents to $25.49; Centex Corp. fell 71 cents to $46.52; KB Home fell 69 cents to $49.40; and Pulte Homes Inc. fell 42 cents to $29.51.

Advancing issues outpaced decliners by about 3 to 2 on the New York Stock Exchange, where volume came to 1.08 billion shares.

The Russell 2000 index of smaller companies was down 0.66, or 0.08 percent, at 792.00.

Overseas, Japan’s Nikkei stock average fell 2.85 percent, while Hong Kong’s Heng Seng index ended down 2.46 percent. The benchmark Shanghai Composite Index rose 3.94 percent. Britain’s FTSE 100 closed down 1.82 percent, Germany’s DAX index finished down 1.53 percent, and France’s CAC-40 was down 1.29 percent.


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