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.

By Charley Blaine Jun 6, 2013 4:46PM
Stock market report © Photodisc Blue/Getty ImagesAt least for Thursday, the stock market did not collapse.

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.

More on Top Stocks
Jun 6, 2013 5:00PM

Should read, "Fed asks banks to pump 3 billion into diving market in last two hours of trading" 

Jun 6, 2013 7:37PM

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.

Jun 6, 2013 8:11PM
I love it!  "key supports", knowing a bit about this, there are no "key supports".  At the "end of the day"....what could more assinine and stupid as that statement and everyone uses it as a "key support",  this whole market thing is a fiasco!
Jun 6, 2013 4:57PM
Wall Street - the FRAUD continues...its now to the point that micro-computer trading has thrown all believability in the market out the window.
Jun 6, 2013 5:29PM

Waco street will be down if hiring is up because they will worry big bad  Ben will back off the printing press.

Jun 6, 2013 5:41PM

DJIA up 80.


It's Obama's fault!!!

Jun 6, 2013 6:22PM
Oh there's Ben B. hiding behind the couch pulling strings. Desperate little Ben - so pitiful.
Jun 6, 2013 8:50PM
When it comes to unemployment they don't take account all the people that lost their unemployment and still are not working.They should also take into account all the people living on the street because they lost everything and could not pay their bills.Then they should also take account all the homeless people that have been living on the streets and subway tunnels and the sewers.It is not their fault all this happened and the government should stop giving huge sums of money to the rest of the world take care of the this country first and if there is anything left then they can give money to other countries
Jun 6, 2013 11:33PM
Well of course they did rebound.

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.

Jun 7, 2013 4:12AM
All frauds eventually implode and collapse upon themselves. The same will happen with our financial markets. And all the "USA" "We're Number1" chants in the world  won't do a thing to stop it from happening.
Jun 7, 2013 12:00AM
I have a prediction something will happen tomorrow just you wait and see and know you heard it here first
Jun 6, 2013 11:19PM
Jun 7, 2013 2:35AM
Plunge protection keep the scam goin!
Jun 6, 2013 10:36PM

That stock photography looks like circa 1997.

Jun 6, 2013 5:55PM
Wall Street wished the markets would go down and got it!!! There wasnt enough news to make the markets move 10 points up or down the last wek but it took 60% of the gain out of investers hands in that time. Manipulation of markets is what took place to let investers who didnt get in through it all in!!! Idiots!!!
Jun 6, 2013 6:26PM
Seems to me the market is "up" because companies are making money.............yea I know there are a few folks out there who just do not want to believe/accept that fact and claim ii's all fraud, manipulation, etc....and all pointed at Obama, liberals, or anyone who doesn't watch Fox (news?).  From where I sit/live, the housing market is recovering (i.e prices up, inventory down), unemployment down, car salesmen are happy, and the subject of "how bad is the economy" has taken a back seat to anything else that can be blamed on Obama (IRS, Benghazi). 
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