- The Washington Times - Saturday, November 8, 2008

NEW YORK | Buyers returned to Wall Street Friday after two days of heavy losses, mindful of the economy’s growing problems but attracted by stocks’ lower prices.

Analysts said the advance, which also came amid relief that a bad report on unemployment wasn’t worse and followed dour third-quarter reports from Ford and General Motors, was to be expected as Wall Street experiences a rocky recovery from October’s devastating selling.

The major indexes jumped more than 2 percent, including the Dow Jones Industrial Average, which rose nearly 250 points in light trading. For the week, the Dow and broader benchmarks like the Standard & Poor’s 500 index lost about 4 percent after surging 10 percent or more last week.

Friday’s trading was a mini-version of the market’s performance over the past two weeks, with investors upbeat, then realizing there was little basis in reality for their resurgent confidence, then changing their minds again.

The market briefly came off its highest levels of the session after President-elect Barack Obama reiterated at a news conference that there is a great deal of hard work to be done to restore the economy to health. Investors had optimistically sent prices higher, only to temporarily pull back when Mr. Obama underscored what they already know: that the economy’s problems won’t be easily solved.

Friday’s economic and corporate news reminded the market that the country could be in for a deep and protracted recession.

The Labor Department said the nation’s employers cut 240,000 jobs in October, hurtling the U.S. unemployment rate to a 14-year high of 6.5 percent. The market had expected employers to cut 200,000 jobs and for the unemployment rate to rise to 6.3 percent.

Meanwhile, Ford Motor Co. reported a $129 million third-quarter loss and announced plans to cut more than 2,000 additional white-collar jobs. General Motors Corp. said it lost $2.5 billion in the quarter and warned it could run out of cash in 2009. The struggling automaker also said it has suspended talks to acquire Chrysler.

Although the day’s news was on its face worse than expected, investors were drawn by prices beaten down the past two sessions and some relief that the reports weren’t more grim.

“We’re coming off of a very oversold market that had already braced itself for bad news out of Detroit and certainly bad economic data in terms of the labor report,” said Peter Cardillo, chief market economist at Avalon Partners.

The market is following the pattern of volatility that analysts warned would prevail for some time to come.

Mr. Obama’s election was preceded by a big rally, during which the benchmark Standard & Poor’s 500 index surged 18.3 percent in six sessions up through Tuesday. This was followed by a two-day loss of about 10 percent in the major indexes, including a 929-point drop in the Dow, as investors turned their focus once more to the economy’s woes.

Nov. 15 is the cutoff for shareholders to notify fund managers of their intent to cash out investments before year-end, which means a sudden influx of “sell” orders could force funds into dumping more investments. Analysts expect this to continue to add to the volatility in the market.

The Dow rose 248.02, or 2.85 percent, to 8,943.81.

The broader S&P 500 index added 26.11, or 2.89 percent, to 930.99, and the Nasdaq composite index rose 38.70, or 2.41 percent, to 1,647.40.

The Russell 2000 index of smaller companies rose 9.95, or 2.01 percent, to 505.79.

Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange, where volume came to a light 1.23 billion shares.

For the week, the Dow fell 4.1 percent, the S&P 500 index lost 3.9 percent, the Nasdaq slid 4.3 percent, and the Russell fell 5.9 percent.

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