- The Washington Times - Friday, June 19, 2009

NEW YORK | Investors can’t seem to get the stock market rally back up to full speed again.

Stocks closed mostly higher but beneath their best levels Thursday following three straight days of losses. Investors piled back into financial and health care companies and moved out of industries like technology that had been leading the market.

Several upbeat economic reports encouraged investors after a slide earlier this week that dragged the benchmark Standard & Poor’s 500 Index down 3.8 percent.

A private research group said its forecast of economic activity rose more than expected in May, marking a second straight gain after seven months of declines.

And the government said the overall number of people drawing unemployment benefits fell last week for the first time since early January. The drop broke a string of 21 straight increases. Separately, the federalPhiladelphia Reserve Bank said manufacturing activity picked up in the mid-Atlantic region.

The reports helped reassure investors that a recovery is still emerging. But analysts caution there may still be more air to be let out of the market’s huge advance since early March, which added as much as 40 percent to the S&P; 500 Index.

“I don’t think that this rally is sustainable,” said Scott Armiger, portfolio manager at Christiana Bank & Trust Co. of Thursday’s move. “I still think we have to give up a little bit more.”

According to preliminary calculations, the Dow Jones industrials rose 58.42, or 0.7 percent, to 8,555.60. The Dow had been up 98 points. The S&P; 500 Index rose 7.66, or 0.8 percent, to 918.37, while the Nasdaq Composite Index slipped 0.34, or less than 0.1 percent, to 1,807.72.

With trading light as the summer slowdown begins, analysts say more volume is needed in order to move the market significantly in any one direction.

Shares of major banks rose Thursday as Treasury Secretary Timothy F. Geithner appeared before the Senate banking committee to defend the regulatory overhaul announced the previous day by President Obama. He also said he has seen evidence of healing in the financial industry.

Financial shares had been under pressure because of anxiety about the banking regulations being planned by the Obama administration in response to the credit crisis. Mr. Geithner defended the government’s proposals, which call for the Federal Reserve to become a super-regulator that would oversee large financial firms whose failure could reverberate throughout the economy.

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