- The Washington Times - Thursday, November 13, 2008

UPDATED:

NEW YORK (AP) – Wall Street launched a massive rebound Thursday after sending the Dow Jones industrials briefly below 8,000. Investors drove the Dow up more than 200 points, betting that the market has priced in enough bad news.

The initial selloff began early in the day after the Labor Department reported that the number of newly laid-off individuals seeking unemployment benefits jumped last week to a level not seen since just after the Sept. 11, 2001, terrorist attacks.

And there were more signs of a severe pullback in consumer spending that pummeled stocks earlier in the week. Wal-Mart Stores Inc. trimmed expectations for full-year earnings. And Intel Corp. late Wednesday cut more than $1 billion from its sales forecast, providing more evidence that few industries are safe from a clampdown on spending by businesses as well as consumers.

But then a Treasury auction of 30-year bonds got decent demand from both domestic and foreign buyers, said Arthur Hogan, chief market analyst at Jefferies & Co., alleviating some fears that the government will have a hard time financing its costly bailout. Meanwhile, the Standard & Poor’s 500 index managed to lift off its Oct. 10 trading lows.

Those factors helped lure back investors, who snapped up a wide swath of stocks that have been battered in the wake of a big three-day selloff.

“This market has significantly priced in some bad news,” said Arthur Hogan, calling it a “great sign” that the S&P recovered after falling below its Oct. 10 trading lows. “Historically, if you test a low within 45 days and close above it, it’s very bullish.”

Many analysts have predicted the market would keep seeing this kind of intense volatility for some time to come as it tries to recover from the devastating losses of October. During past recoveries from bear markets, a great deal of turbulence in the market became commonplace.

After the week’s litany of bad news, which also included disappointing reports from Macy’s Inc. and Starbucks Corp., investors were trying to come to terms with the fact that the economy is in for a protracted downturn. The market has been confident about the economy one minute, only to be met with negative data that creates another wave of selling.

In midafternoon trading, the Dow rose 217.52, or 2.63 percent, to 8,500.18 after falling to 7,965.42.

The Standard & Poor’s 500 index rose 24.77, or 2.91 percent, to 877.07, after dropping to 818.69, well below its intraday low of 839.80 on Oct. 10.

The Nasdaq composite index shed 32.92, or 2.20 percent, to 1,532.13.

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