- The Washington Times - Friday, February 13, 2009

Wall Street rallied and recovered from a major sell-off Thursday, closing mixed on reports that the Obama administration was working on a plan to subsidize mortgages for homeowners having trouble making their payments.

At the close, the Dow Jones Industrial Average dropped 6.77, or 0.09 percent, to 7,932.76, recovering from a 3.1 percent plunge. The tech-heavy Nasdaq rose 11.21, or 0.73 percent, to 1,541.71. The broader Standard & Poor’s 500 inched up 1.45, or 0.17 percent, to 835.19.

The rally came in the final minutes following a Reuters report saying the administration would subsidize mortgage payments for financially strapped homeowners who would have to pass a uniform eligibility test given by mortgage lenders.

The markets had been in sell-off mode for nearly the entire trading session because Congress still had not passed the administration’s $789 billion stimulus package and there were no clear-cut indications about how the Treasury Department would implement phase two of the $700 billion bailout plan.

Treasury Secretary Timothy F. Geithner said Tuesday that the administration was working on a $50 billion mortgage modification program, but nothing had been done. Wall Street apparently needed a clear signal that a plan will be implemented shortly to help fix the economy.

The price of a barrel of light, sweet crude oil dropped below $35, good news for motorists filling up at gas pumps.

Elsewhere, the Labor Department reported that the number of people who filed for jobless benefits for the first time eased by 8,000 to a seasonally adjusted 623,000 for the week ended Saturday. Analysts had expected 610,000 to file, according to Thomson Reuters.

The downside of the department’s report, though, was that the number of people who continued to collect unemployment benefits increased 11,000 to 4.81 million for the week ended Jan. 31, the highest on record, the agency said.

In unexpected news, the Commerce Department said total retail sales rose 1 percent in January, their first increase in seven months, showing some light through the darkness of the 14-month recession. It marked the biggest monthly increase since November 2007, a month before the recession officially began.

The boost among retailers came as a surprise because Thomson Reuters had predicted that retail sales would slump 0.8 percent in January.

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