Stocks rebound in fractious session
EmptyNEW YORK -- Wall Street finished a back-and-forth session sharply higher Wednesday as investors sought bargains while also contending with concerns about the strength of the economy and upcoming corporate results.
The Nasdaq composite index showed its first gain in nine sessions and the Dow Jones industrial average gained more 200 points in the final 90 minutes of the session to end nearly 150 points higher.
The gains at the end of a fractious session came ahead of a fourth-quarter report from Alcoa Inc., which marked the unofficial start of earnings season.
Wednesday's session was as choppy as Tuesday's, when stocks tumbled amid concerns about the economy. Unease about the economy has caused intense market volatility since the start of the year, with stocks rising on hopes for more interest rate cuts, and plunging as investors doubt that will be enough. The market is also worried about how fallout from the mortgage and credit crisis has affected corporate earnings.
A prediction of a recession in 2008 by Wall Street's biggest investment bank at times appeared to weigh on investors. Goldman Sachs said it expects fallout from the housing slump and recent tightness in the credit markets will spread to the broader economy this year.
Countrywide Financial Corp. may have added to the seesaw trading, saying Wednesday that the delinquency and foreclosure rate of home loans in its portfolio surged in December. The stock in the nation's largest mortgage lender had fallen sharply Tuesday amid bankruptcy rumors that the company said were baseless. Countrywide fell 35 cents, or 6.4%, to $5.12.
Wednesday brought little in the way of economic news and investors instead awaited a speech by Federal Reserve Chairman Ben Bernanke set for Thursday that could give clues about the central bank's stance on the weakening economy.
Jennifer Ellison, principal with wealth management firm Bingham, Osborn & Scarborough in San Francisco, said the market's rebound was gratifying.
"I think it's a good sign that it ended on a positive note rather than staring positive and ending negative," she said. "That's particularly significant coming on the heels of the Goldman report this morning."
She expects, however, that volatility will remain as investors pounce on the latest signals about the economy.
"People are trading on one thing in the morning and then trading on a completely different thing in the afternoon, more so than normal. I think you can't put too much weight on anything that happens on this short-term term of a basis," she said of Wednesday's gains.
The Dow, which had been down nearly 90 points in the session, finished up 146.24, or 1.16%, to 12,735.31.
Broader stock indicators also rebounded. The Standard & Poor's 500 index rose 18.94, or 1.36%, to 1,409.13, and the Nasdaq composite index, which had been down more than 1% during the session, finished up 34.04, or 1.39%, at 2,474.55.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to 2.06 billion shares compared with 1.84 billion Tuesday.
The rebound Wednesday wasn't large enough to pull the Dow from the realm of a correction, which is a 10% drop from a recent high. The blue chip index is still off 10.1% from its Oct. 9 high. The S&P 500 is now down 9.97% from its high.
Bond prices rose Wednesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.82% from 3.84% late Tuesday. The dollar was mixed against other major currencies, while gold prices rose.
Light, sweet crude fell 66 cents to $95.67 a barrel on the New York Mercantile Exchange after a government report showed domestic inventories declined last week.
Alcoa reported after the closing bell that its fourth-quarter profit jumped 76%, helped by the pending sale of its packaging and consumer businesses. Earnings rose to $632 million, or 75 cents per share, from $359 million, or 41 cents per share, a year earlier. The results handily topped Wall Street's expectations.
Wall Street had been hoping the results would help indicate how well the economy was holding up. Alcoa, one of the 30 stocks that comprise the Dow industrials, finished up 25 cents to $31.25 and rose to $32.50 in after-hours trading.
Chemical maker DuPont Co. rose $2.03, or 4.8%, to $44.78 after raising its fiscal 2007 profit forecast, citing better-than-expected fourth-quarter sales. The company, which makes a wide range of products including automotive coatings and genetically modified seeds, also lifted its forecast for 2008.
The Russell 2000 index of smaller companies rose 7.26, or 1.03%, to 712.12.
Overseas, Japan's Nikkei stock average closed up 0.49%. Britain's FTSE 100 fell 1.32%, Germany's DAX index dropped 0.86%, and France's CAC-40 fell 1.10%.