Dow up 80 as stocks rebound from sell-off
The market rebounds after testing several key supports. But stocks face big challenges with Friday's big jobs report.
At 12:30 p.m. ET, with the major averages giving every indication they might suffer worse losses than they did on Wednesday, the market started to rebound.
The Dow Jones industrials ($INDU), had been down more than 116 points at their low. The blue chips closed up 80 points at 15,041, a swing of 196 points.
The Standard & Poor's 500 Index ($INX) was up 14 points to 1,622 after falling as many as 11 points at its low. The Nasdaq Composite Index ($COMPX) had gained 23 points to 3,410, up from decline of 23 points at the low.
But don't get cocky. The government will report on payroll growth and unemployment on Friday, and markets could be equally volatile.
The S&P 500 seems to the key to Thursday's market turn. At 12:25 p.m. ET it dropped under 1,600, a key support level, but held at 1598.23. It bounced higher and fell to 1,599.41 and rebounded a second time.
That's a successful test of a support level.
Perhaps as important, the Dow briefly fell below its 50-day moving average, a key measure of investors confidence. But, with the rally, the blue-chip index ended the day 0.8% above the indicator, and it climbed back above 15,000.
When it was clear a rebound was on, short sellers -- who had been betting on a lower market -- were forced to buy back shares to cover their positions. That accelerated the rally.
Interest rates dropped as stocks fell. When the Dow and S&P 500 hit their lows, the 10-year Treasury yield hit 1.999%, down from Wednesday's 2.1%. As the rebound continued, the yield moved back to 2.075%. It is still off from its 52-week high of 2.211%.
The 10-year yield moved up from 1.61% on May 1, as speculation built on when the Federal Reserve might start to taper its bond-buying and allow rates to rise. The rate decline set off a rebound in housing stocks.
The real drama will come on Friday, when the Labor Department reports its estimate of payroll employment and unemployment. The consensus estimate for the payroll gains is 169,000, with the unemployment rate holding at 7.5%. The report is due at 8:30 a.m. ET, an hour before the stock market opens.
If payrolls come in significantly lower than expected, the market will probably open sharply lower. If payrolls meet estimates or are better than expected, there may be a big jump at the open.
The catalyst for the early selling on Thursday was that the yen moved sharply higher against the dollar -- as investors seemed to want to borrow cheaply in Japan and invest elsewhere. That pushed gold, silver, platinum and oil prices higher.
But the worries about the domestic economy pushed interest rates lower for a second day, and housing and housing-related stocks moved higher. The iShares Dow Jones US Home Construction exchange-traded fund (ITB) was up 70 cents to $23.76. It had fallen 12% between its high on May 22 and Wednesday. The ETF tracks home builders.
Home Depot (HD) was up $2.16 to $77.26, the second-best performer among the 30 Dow stocks. Lowe's (LOW) added $1.10 to $40.70.
Housing and networking stocks were the leading groups on Thursday, with airlines and semiconductors the laggards.
Crude oil (-CL) in New York settled at $94.76 a barrel, up $1.02. Brent crude, the benchmark North Sea oil that influences retail gas prices greatly, was at $103.45 a barrel, up 41 cents. Gold (-GC) was up $17.30 to $1,415.80 an ounce.
The U.S. Dollar Index, which tracks the greenback against a basket of currencies, was off 1.5% to 81.54. That was the biggest percentage decline since October 2011. The decline was mostly to due declines in Japanese stocks.
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Should read, "Fed asks banks to pump 3 billion into diving market in last two hours of trading"
TRUE employment vs unemployment numbers are never posted. Actual unemployment, to include those who no longer can receive benefits and still remain unemployed, are NOT included. How about finding a way to track that number!?!? Not to mention those who are under employed in part time jobs after having lost a full time job or having hours cut.
Waco street will be down if hiring is up because they will worry big bad Ben will back off the printing press.
That was the whole idea behind the manipulation of it by the wealthy. Its like a little Monopoly game to them. It dropped because they claim the economy, but that was yesterday. So I guess it fixed itself overnight between 5pm and 9am this morning. What a f##king joke.
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3 stocks will be in the spotlight Thursday as investors try to make sense of the numbers from the sector.
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