Stocks end mixed | Company
NEW YORK — Wall Street had another session rocked by volatility on Thursday, this time closing mixed after investors battled fears about the economy but also looked for bargains after two days of selling. While the Dow Jones Industrials Index and Standard & Poor’s 500 Index rose sharply, a decline in tech stocks left the Nasdaq Composite Index in the red.
Buying came in spurts and then tended to quickly evaporate as investors feared the economy was in or heading into a recession. They showed little confidence, gravitating towards big-name stocks seen as safer bets after a two-day selloff cut nearly 750 points off the Dow Jones.
“I think people think you have to stop slipping somewhere and they’re basically looking for bargains,” said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York. “The analogy I’m using right now is that you can buy a BMW at the Toyota price. But there’s always fear that better deals can be had.
With its swings, Wall Street lives up to expectations that trading will remain volatile as investors try to test whether the market has bottomed.
Manny Weintraub, president of Integre Advisors in New York, said several of the market’s attempts to rally were short-circuited by sellers waiting for an opportunity to cash out and some investors looking to buy stocks good market feared to be burned by still declines.
“A lot of bargain hunters came in last week and now that the money has been spent, they can’t hunt twice,” he said.
Investors spent the session trying to extract clues about where the economy is headed from a mix of corporate news.
Goldman Sachs Group Inc. is preparing to cut about 10% of its workforce, according to a person briefed on the plan who requested anonymity because the company had not publicly disclosed details of the plan. Dow Chemical Co. said its quarterly profit rose 6%, helped by price increases that offset a nearly 50% increase in raw material and energy costs.
Meanwhile, Amazon.co.uk Inc. Lowered Full-Year Revenue Guidance Amid Weakening Economy; the news weighed on tech and small-cap stocks.
Weintraub said Amazon’s forecast is the latest disappointment for the tech sector, following pessimistic reports from eBay Inc. and Texas Instruments Inc. Some investors had hoped, seemingly in vain, that the sector would avoid some issues affecting financial firms and other parts of the economy.
“As we go through the earnings season, revenue fundamentally isn’t great,” Weintraub said.
A snapshot of the labor market highlighted one of investors’ worries about the fragility of the economy. The Labor Department reported Thursday that new jobless claims rose 15,000 last week to a seasonally adjusted 478,000. That was slightly above analysts’ estimates of 470,000. Unemployment claims above 400,000 are seen as a sign of a recession.
Investors viewed the data as further evidence that the financial crisis is hitting the economy and forcing companies to cut spending.
Thomas J. Lee, U.S. equity strategist at JPMorgan Chase & Co. in New York, warned that Wall Street will have to rein in its sharp swings before some investors feel confident enough to return.
“I don’t think anyone can buy and sell stocks right now with conviction,” he said.
The Dow Jones rose 172.04, or 2.02%, to 8,691.25, after rising 277 points and falling 276 points during the session. On Wednesday, the Dow Jones lost 514 points as investors feared the global economy was on the verge of weakening. That was on top of a 231-point loss on Tuesday.
Broader stock indicators were mixed on Thursday. The Standard & Poor’s 500 index rose 11.33, or 1.26%, to 908.11, and the Nasdaq fell 11.84, or 0.73%, to 1,603.91.
The Russell 2000 Small Business Index fell 12.05, or 2.40%, to 489.92.
While major indexes were mixed, falling issues outnumbered roughly 5-3 advances on the New York Stock Exchange, where consolidated volume was 7.05 billion shares versus 6.60 billion shares traded Wednesday.
Credit markets again showed signs of easing after the lockdown when Lehman Brothers Holdings Inc. filed for bankruptcy in mid-September.
A $988 million auction of debt from bankrupt bank Washington Mutual Inc. fetched a price significantly higher than that seen for a similar auction of Lehman Brothers debt earlier in the month. The sale priced $988 million of WaMu debt at 57 cents for every dollar of debt sold, compared to 8.625 cents per dollar that a $4.92 billion sale of Lehman debt brought in.
As well as indicating greater confidence in WaMu’s debt, the auction also indicated that some investors are increasingly willing to engage in risky debt following a series of coordinated actions taken by governments. around the world to build confidence in credit markets.
But a significant improvement in credit markets, which should help revive business and consumer lending, will take time, although there are signs of a gradual easing. The three-month dollar lending rate – known as the London Interbank Offered Rate, or Libor – remained unchanged at 3.54%. The rate fell to that level on Wednesday and is the lowest since September 24.
And while demand for short-term Treasuries has increased, yields are much higher than they were last week. The three-month bill, considered the safest asset, returned 0.94%, down from 1.01% on Wednesday night. Last week, the yield was 0.20%, indicating that investors were willing to trade the slimmest yields for a safe place to keep their money.
The yield on the benchmark 10-year Treasury note, which moves opposite to its price, rose to 3.66% from 3.60% on Wednesday night.
The dollar was mixed against other currencies after hitting multi-year highs on Wednesday, while gold prices fell.
Light and sweet crude rose $1.09 to settle at $67.84 on the New York Mercantile Exchange. The contract fell to a 16-month low on Wednesday as a rise in U.S. crude oil and gasoline inventories fueled belief that a weak economy is eroding energy demand.
Among the individual actions, Amazon.co.uk rose 33 cents to $50.32 after trading at $43.31. SanDisk Corp. hurt the Nasdaq after falling 95 cents, or 9.4%, to $9.14. The stock fell sharply for two days after news that Samsung Electronics Co. dropped a bid to acquire the flash memory component maker.
Goldman Sachs fell $6.13, or 5.3%, to $108.58, while Dow Chemical rose $3.23, or 10.5%, to $24.43.
Dow Jones blue chips that attracted buyers included Boeing Co., up $3.61, or 8.4%, at $46.52, and 3M Co., which rose $3.35, or 5.8%, to $61.54.
Overseas, Japan’s Nikkei stock average fell 2.46%. Britain’s FTSE 100 rose 1.16%, Germany’s DAX index fell 1.12% and France’s CAC-40 rose 0.38%.
AP Business Writer Stephen Bernard in New York contributed to this report.