Dow soars 423 as roller-coaster market rolls on
The market reverses Wednesday's big loss on short-covering and a larger-than-expected decline in jobless claims. Financial stocks rebound. Cisco Systems and News Corp. rally. Gold and silver fall. Short-selling of French banks is halted.
Stocks rallied sharply higher today, but, given the market's performance this week alone, an investor would be well within his rights to be at least a little skeptical of the rally's durability.
The Dow Jones Industrial Average ($INDU) briefly jumped as many as 559 points before dropping back to a gain of 423 points -- its 12th-largest point gain ever -- and recovered 80% of its 520-point loss on Wednesday. The blue chips have been up or down at least 400 points every day this week for the first time ever, The Wall Street Journal noted.
The Standard & Poor's 500 Index ($INX) and the Nasdaq Composite Index ($COMPX) recovered all of their Wednesday losses.
The catalysts for today's rally were a better-than-expected report on weekly jobless claims and gains for Cisco Systems (CSCO) and embattled media giant News Corp. (NWSA). Shares of both companies jumped at least 16%. Plus financial stocks, battered badly on Wednesday, were higher as European stocks rebounded.
The Dow closed up 423 points, or 4%, to 11,143. The S&P 500 added 52 points, or 4.6% to 1,173, and the Nasdaq was up 112 points, or 4.7%, to 2,493.
Article continues below. This started as a nice bounceback rally, then morphed into a huge short-covering rally. Short-sellers who had sold shares short expecting the market to move lower were forced to buy the shares back to cover their positions.
The problem with short-covering rallies is they can be agonizingly short. The size of the rallies (as well as the declines) suggest investors are very uncertain about what to expect in the economy going forward.
The Dow is off 2.6% this week, with the S&P 500 down 2.2% and the Nasdaq 1.6%. For the year, the Dow is off 3.8%, with the S&P 500 down 6.8% and the Nasdaq down 6%.
The market got a nice boost from a Labor Department report estimating that initial jobless claims unexpectedly fell by 7,000 to 395,000 in the week ended Aug. 6. The claims rate has hovered around 400,000 for the past three weeks.
The rally pushed interest rates higher; the 10-year Treasury yield was at 2.336%, up from Wednesday's 2.137%. Rates also moved higher after an auction of 30-year Treasury bonds produced a yield of 3.75%, higher than expected.
After the close, shares of chip-maker Nvidia (NVDA) and upscale department-store chain Nordstrom (JWN) were higher after both reported results that beat Street estimates. Nvidia was up 18.6% after hours to $15.90; Nordstrom was up 3.2% to $43.70.
Will Friday be another tough day?
The market has been wildly volatile in the last few weeks, but today's Dow performance and the seven prior days have been especially so.
Since Aug. 2, when the Dow fell 266 points, the next day has produced a gain -- some small but some quite large, like Tuesday or today. So does that mean watch out for Friday? Maybe.
Futures trading suggests a modestly lower open for Friday.
The Commerce Department reports on June retail sales. The University of Michigan's Consumer Sentiment Index is due. JC Penney (JCP) and Brazil's big oil company Petrobras (PBR) will report quarterly results.
|The Dow 's roller-coaster days|
|Date||Dow close||Point chg.*|
|*From prior session|
If that's not enough, the gap between the Dow's daily high and low has been 400 points for the past six days. That's happened only twice before, both in October 2008 during the worst of the financial crisis. The first of those streaks lasted 12 sessions, between Oct. 3 and Oct. 20.
Financials foreign and domestic see a rebound
European stocks -- especially bank stocks -- were higher today after French President Nicolas Sarkozy and German Chancellor Angela Merkel scheduled a meeting for Tuesday to discuss proposals to strengthen the eurozone's economic governance.
Late today, France banned short-selling on stocks of all French banks.
The European rally spread to U.S. financial stocks as well. Both had been hit hard Wednesday amid rumors and worse that a major French bank, possibly Societe Generale (SCGLY), was in deep trouble. Societe Generale pointedly denied any problems.
Today, however, the shares of the three biggest big French banks, including SocGen, as many call it, rallied in U.S. trading.
Societe Generale was up 5.3% to $6.80. BNP Paribas (BNPQY) added 4.1% to $26.12. Credit Agricole (CRARY) was up 6.7% to $4.59.
In the United States, meanwhile, Bank of America (BAC) rose 7.1% to $7.25, a day after its top management, including CEO Brian Moynihan, spent two hours on a conference call with investors trying to explain their business, risks and strategies.
Citigroup (C) was up 6.3% to $30.29. JPMorgan Chase (JPM) was up 6.8% to $36.69. Capital One (COF), which announced Wednesday a deal to buy HSBC's (HBC) U.S. credit-card business, added 7.5% to $44.14. HSBC was up 6.2% to $44.10 in New York.
|Energy prices -- New York close|
|Thur.||Wed.||Month chg.||YTD chg.|
|Crude oil (-CL)||$85.72||$82.89||-10.43%||-6.19%|
|Heating oil (-HO)||$2.8992||$2.8653||-6.36%||13.98%|
|Natural gas (-NG)||$4.1080||$4.0030||-0.89%||-6.74%|
|(per mil. BTU)|
|Unleaded gasoline (-RB)||$2.8273||$2.7825||-7.54%||15.25%|
|(per gallon; AAA)|
Oil prices move higher
Energy shares pushed higher as crude oil (-CL) continued its rally from Tuesday's closing low of $79.30 a barrel.
Light sweet crude rebounded to $85.72 a barrel, up $2.83. Brent crude was up $1.22 to $107.90 a barrel.
There is a theory among some analysts that the resilience of crude prices in the last few days is a signal of decent demand -- and therefore evidence the domestic economy at the very least isn't falling apart.
Exxon Mobil (XOM) was up 5.2% to $71.58. It was able to reclaim its rank as the top stock by market cap from Apple (AAPL). Apple finished up 2.8% to $373.70. But Exxon's market cap was $348 billion to Apple's $346.5 billion.
Meanwhile, the Energy Select Sector SPDR (XLE) exchange-traded fund was up 5.2% to $66.47. The ETF tracks the energy sector of the S&P 500.
Gold falls as margins increase
While stocks were up, gold (-GC) was not. In fact, gold for December delivery settled down $32.80 to $1,751.50 an ounce after CME Group, which owns the U.S. futures exchange where gold is traded, boosted margin requirements by 22%. That makes speculating in gold more expensive.
The move knocked the SPDR Gold Shares (GLD) exchange-traded fund down 2.2% to $171. The ETF is still up 23% this year.
Silver (-SI) for September delivery also fell 65.8 cents, or 1.7%, to $38.669 an ounce on the news. The CME raised margin requirements on silver in May when it hit $50 an ounce.
Cisco and News Corp. see big gains
Cisco was up 16% to $15.92 after reaching as high as $16.21. The company beat Street estimates on its fiscal-fourth-quarter earnings and forecast earnings for the fiscal first quarter higher than expected as well. Three analysts either upgraded their rating on the shares or boosted price targets.
Cisco's results helped tech stocks generally move higher. Chip stocks had a big day with the Philadelphia Semiconductor Index ($SOX) up 5.2% to 357. All of the stocks in the index were higher.
News Corp. was up 18.1% to $16.19 after the company's fourth-quarter results bested Wall Street estimates. Adjusted fourth-quarter earnings came in at 35 cents a share on revenue of $8.96 billion. Analysts had forecast earnings of 32 cents a share on revenue of $8.46 billion.
The results came despite the continuing scandal in Britain over illegal hacking of cellphones by staff of the company's now-shuttered News of the World. CEO Rupert Murdoch said he doesn't plan to retire.
|Short hits from the markets -- New York close|
|Thur.||Wed.||Month chg.||YTD chg.|
|13-week Treasury bill||0.010%||0.020%||-88.89%||-91.67%|
|5-year Treasury note||0.988%||0.929%||-28.04%||-50.99%|
|10-year Treasury note||2.336%||2.137%||-16.72%||-29.32%|
|30-year Treasury bond||3.787%||3.538%||-8.35%||-13.18%|
|U.S. Dollar Index||74.81||74.769||1.05%||-5.65%|
|(in U.S. $)|
|U.S. $ in pounds||£0.616||£0.620||1.27%||-3.84%|
|Euro in dollars||$1.42||$1.42||-1.22%||6.35%|
|(in U.S. $)|
|U.S. $ in euros||€ 0.703||€ 0.706||1.24%||-5.97%|
|U.S. $ in yen||76.98||76.76||-0.08%||-5.39%|
|U.S. $ in Chinese||6.42||6.42||-0.66%||-3.01%|
|(in U.S. $)|
|(in Canadian $)|
|(per troy ounce)|
|(per troy ounce)|
|Crude oil (-CL)||$85.72||$82.89||-10.43%||-6.19%|
Don't care if it goes up or down....its not the same market and it is not the same America. We are living in a different land now, and until the US Government understands they provide services to us, it will remain this way. WE MUST VOTE THESE PEOPLE OUT, AND THEN WE MUST KEEP THE GOVERNMENT IN ITS PROPER ROLE. I am with ODSTN on this one.
I am mad as hell, and I am not going to take it anymore. I am going to write and talk and never give up. The Wall Street/Fannie Mae and Freddie Mac destruction of this country needs to stop. Why do the banks have TRILLIONS of dollars in reserve, and WILL NOT loan an entrepreneur one dime to grow her business. The taxpayer who bailed out the bank cannot borrow money. Why? because the Wall Street Wizards decided to bundle residential properties and sell them as a no risk investment because American real estate never depreciates. Ha, ha, wizards; I guess you were wrong about that.
All I can say is HOW DO YOU LIKE THE CHANGE.....the only change I have is in my pocket. While Obama is in Martha's Vineyard, I can't afford to stay at Motel 6 .I can't afford the gas to get to a motel 6 Let alone stay at one .
Talk about being detached from the American people . This President is so detached from us he is on vacation !
The rich, including Obama, continue to get richer and the poor continue to get poorer. Who is paying the bills...the so called middle class.
Ya, pass another bill to give more money to the poor that destroy housing and etc they are provided from tax money from the middle class. Why do the politicians want to pass the bill...to get re-elected.
All these ups and downs are a game played by the day traders skimming the money from the long term investors. Day trading should be regulated and profits should should be taxed with a huge tax bracket.
Damn scumbags of wallstreet speculators, they think it is a casino !
ok it is up from where it bottomed out yesterday , but is it back to where it was before the big drops on monday and wed. no far from it. it is like playing play the lottery spend $100.00 to win $20.00 you think you are winning until you think about it , hey I am really down $80.00.
what a joke up 300 pts after dropping 1,000 your still down 700 pts right?
My son said the other night you wonder why there are so many drug dealers, they pay no taxes, its big money and they will never be unemployed as long as there are stupid people in this country.
Its a numbers game, speculators knowing how to play the panic button. If you know the game you can get wealthy if you don't know the game and continue playing it your going to feel like somebody grabbed you by the ankles turned you upside down and shook you out so now your broke. it's all due to somebody told the world that its in dire economic condition and caused a panic of sorts. The world needs to get off it and move forward.
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[BRIEFING.COM] The S&P 500 has slipped to fresh lows as the broader market continues to show weakness. Nine of ten sectors trade with losses larger than 0.5% while the consumer staples space registers a slim gain due to the relative strength of Procter & Gamble (PG 81.61, +2.91) following its management shake-up.
With the broader market seeing early losses, the CBOE Volatility Index (VIX 14.51, +0.44) is higher by about 3.0%.
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