A big sell-off becomes a big rebound
Huge losses in the morning are trimmed in the afternoon. Jobless claims worsen. Concerns about Greece grow. Will Apple split its shares?
Updated at 9:00 p.m. ET
Investors got two markets for the price of one today as stocks tumbled sharply at the open and rallied almost as sharply in the afternoon.
The morning catalysts were more worries about the possibility that Greece might default on its foreign loans and a surprising and distressing report on initial job claims.
Once down nearly 190 points, the Dow Jones industrials ($INDU) finished with a loss of about 53 points to 10,321. The Nasdaq Composite Index ($COMPX) slipped a whopping 2 points to 2,234, and the Standard & Poor's 500 Index ($INX) shed 2 points to 1,103.
The S&P 500 and Nasdaq had been down as much as 1.7% before turning around.
The recovery was strong enough that the Dow may finish February with a 2.5% gain, with the S&P 500 up 2.7% and the Nasdaq up nearly 4%. Friday is the last day of trading for the month.
With the rebound of today's lows, the market looks to open higher on Friday, futures trading suggests.
Economic reports will dominate the thinking, including a revision of fourth-quarter gross domestic product and the January report on existing-home sales from the National Association of Realtors.
Dollar, talk of Apple stock split stoke rally
It's not clear what stopped today's bleeding. Another rally in the U.S. dollar fell apart in the late afternoon. That let stocks that do well in a low-dollar environment make a comeback. So, Caterpillar (CAT), which had been down as much as 4.8% in the morning, finished with a 0.3% decline to $56.79.
There was a rumor that Apple (AAPL) might split its stock 4-to-1, an idea that cheered some investors. A split might make the shares more affordable and generate more interest in the company.
So, the stock, which dropped nearly 2% right after the open, rallied to a 0.7% gain to $202.
Apple had no comment on the rumor.
At the end of the day, about 20 of the 30 Dow stocks finished lower. So did 296 S&P 500 stocks and 59 stocks in the Nasdaq-100 Index ($NDX.X), which tracks the largest Nasdaq stocks. The index finished with a tiny gain -- but a gain, nonetheless -- at 1,813.
The day began with worries that the big rating agencies were about to downgrade the debt of Greece. Greece has been scrambling to get its financial house in order.
Its prospects were dimmed on a New York Times report that big investment banks that helped Greece issue increasingly larger amounts of debt are now betting that the country will default on its debt.
Federal Reserve Chairman Ben Bernanke said the central bank would look into the reports.
Bernanke appeared on Capitol Hill for a second day today, where he repeated his Wednesday statement that interest rates at near-zero levels are needed as the economy will recover slowly.
Downgrade threats hit Greece
Greece will issue a 10-year bond next week, The Wall Street Journal reported this morning, an effort by the country to rein in its deficit and ease investor concerns.
Ratings company Standard & Poor's late Wednesday warned that it could downgrade Greece's sovereign debt rating within a month. Moody's Investors Service today said it could lower its rating on Greece in several months.
The euro was lower this morning, sending the dollar higher. Crude oil was off $1.91 to $78.09 a barrel. Gold settled up $11.30 to $1,108.50 an ounce.
|Energy prices -- New York close|
|Thur.||Wed.||Month chg.||YTD chg.|
|(per mil. BTU)|
|(per gallon; AAA)|
Initial jobless claims hit 3-month high
Initial jobless claims rose by 22,000 last week to a seasonally adjusted 496,000, the Labor Department said this morning. Economists had been expecting claims to have fallen to 460,000.
It was the highest rate since the middle of November and the sixth increase in the first eight weeks of 2010. The four-week average of initial claims rose 6,000 to 473,750.
"This level of claims is still inconsistent with private sector employment growth," Nomura Securities economist Zach Pandl wrote in a note to clients. "We believe today's report adds downside risk to our forecast for nonfarm payroll employment for February."
Continuing claims fell by 320,000 to 5.68 million in the week ended Feb. 6. In total, 11.55 million people were collecting some type of unemployment benefits in the week of Feb. 6, down from the previous week's 11.8 million.
Durable-goods orders surge, sort of
Durable-goods orders jumped 3% in January to a seasonally adjusted $175.7 billion, the biggest gain since July 2009, the Commerce Department reported this morning. Economists had been looking for a 1.5% gain.
The boost was due to higher bookings for civilian aircraft, which surged 126%. But traded focused on something else. Excluding a 15.6% gain in transportation orders, orders were down 0.6%.
"Today's U.S. economic reports were more dismal than the market may appreciate," economists at Action Economics wrote in a note to clients. The temporary boost from aircraft "put a happy face on what was otherwise a notably weak report."
December's orders were revised higher to a 1.9% increase from a previously reported 1% gain.
Coca-Cola to buy its biggest bottler
Coca-Cola (KO) will own the majority of its biggest bottler, Coca-Cola Enterprises (CCE), the companies said this morning.
Coca-Cola Enterprises shareholders will get $10 a share and one share in the new bottling company. Coca-Cola will assume $8.88 billion of the bottler's debt and all of its North American assets and liabilities.
Shares of Coca-Cola were down 3.7% to $53.12, the worst performance among the Dow stocks. Coca-Cola Enterprises shares jumped 32.9%, to $25.48.
|Short hits from the markets -- New York close|
|Thur.||Wed.||Month chg.||YTD chg.|
|13-week Treasury bill||0.115%||0.110%||64.29%||130.00%|
|5-year Treasury note||2.338%||2.360%||-0.43%||-12.96%|
|10-year Treasury note||3.642%||3.695%||0.91%||-5.23%|
|30-year Treasury bond||4.582%||4.634%||1.60%||-1.27%|
|U.S. Dollar Index||80.86||80.915||1.52%||3.38%|
|(in U.S. $)|
|U.S. $ in pounds||£0.6536||£0.6487||4.28%||5.73%|
|Euro in dollars||$1.3510||$1.3543||-2.59%||-5.74%|
|(in U.S. $)|
|U.S. $ in euros||€ 0.7402||€ 0.7384||2.66%||6.09%|
|U.S. $ in yen||89.04||90.16||-1.14%||-4.26%|
|(in U.S. $)|
|(in Canadian $)|
|(per troy ounce)|
|(per troy ounce)|
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[BRIEFING.COM] Market is caught in a bit of a downdraft that has pared today's gains, yet has failed to erase them altogether. It is worth noting that selling picked up a bit (don't want to over emphasize it at this point) on a headline attributed to Dallas Fed President Fisher who said the cost of the Fed's bond buying is exceeding the benefits.
This is not a surprising view from one of the Fed's recognized hawks, but in a low-volume market it was enough to create a little shock ... More
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