Stocks rebound from sharp sell-off
NEW YORK -- Wall Street capped a week of remarkable volatility with a big advance Thursday that left stocks higher for the week but didn't silence all of investors' concerns about the economy and the financial system.
Bargain-hunting and a milder-than-expected drop in a regional manufacturing report helped leaven stocks Thursday. The Dow Jones industrial average rose about 260 points on the day, giving the blue chips a gain of more than 3 percent for the week. Broader indexes finished the week with gains of 2 percent to 3 percent. The markets are closed today for Good Friday.
A week that opened with fearful questions over the soundness of the financial system following the near collapse of Bear Stearns Cos. ended on a more upbeat note, thanks in part to the Federal Reserve's efforts to inject both liquidity and calm into the markets.
The central bank not only again cut interest rates but also said it would loan directly to investment banks and accept as collateral much of the now-shunned debt that is backed by mortgages.
But while many investors praised the Fed's unusual steps, including the deal it brokered for JPMorgan Chase & Co. to buy Bear Stearns, many still worried about the banking system and the economy.
Economic readings Thursday exemplified the mixed signals. The Labor Department said the number of newly laid off workers filing for unemployment benefits rose last week by a more-than-anticipated 22,000 to 378,000. That level is the highest in nearly two months. Meanwhile, the Conference Board said its index of leading economic indicators fell, as expected, for the fifth straight month in February.
But Wall Street found reason to buy back into stocks after a sell-off Wednesday when the Philadelphia Fed said manufacturing activity is dropping in March by less than it did in February, and by less than many economists anticipated.
And another day of sharp declines in commodities prices gave investors hope lower energy and food prices might boost consumers' discretionary spending and ease inflation concerns.
Light, sweet crude for May delivery fell 70 cents to settle at $101.84 a barrel on the New York Mercantile Exchange Thursday after sliding to as low as $98.65 earlier.
Gold for April delivery lost $25.30 to settle at $920 an ounce on the New York Mercantile Exchange, after earlier falling as low as $904.70, its lowest level since Feb. 19. On Wednesday, gold dropped 5.9 percent, its biggest one-day loss in nearly two years and almost $100 less than its all-time high of $1,033.90 reached Monday.