The New York Times-20080125-With a Day of Steady Gains- U-S- Stocks Join in a Global Rebound
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With a Day of Steady Gains, U.S. Stocks Join in a Global Rebound
The Dow Jones industrial average spent most of Thursday in positive territory, and the major American markets closed near their highs for the day as investors extended a global financial rally that began Wednesday afternoon.
The Dow closed up 108.44 points, or 0.9 percent, to 12,378.61, and the broader Standard & Poor's 500-stock index climbed 1 percent, to 1,352.07. The Nasdaq composite index gained 1.9 percent, closing at 2,360.92, as technology stocks surged on strong earnings reports from Qualcomm and Xerox.
It was a relatively quiet day for the markets after two wildly volatile sessions. Unlike recent trading sessions, Thursday's numbers involved no sudden 300-point swings.
Much of the day's action took place in the commodities markets. With investors expecting the Federal Reserve to cut interest rates again when it meets next week -- futures markets now predict a half-point reduction -- gold, oil, corn, lumber and other metals and goods became more attractive.
Lower interest rates make it easier for businesses and consumers to get money, pushing down the value of the dollar. Many commodities are traded in dollars; when investors expect the dollar to weaken, they look to snap up commodities as a hedge against inflation.
Gold gained $22.53, to settle at $912.85 a troy ounce. Crude oil futures rose $2.42, to $89.41 a barrel, after several days of declines. The euro also gained against the dollar.
Energy stocks led the day's gains, while shares of financial companies continued to improve modestly after surging late on Wednesday.
This is part of a bounce you're going to have in a very, very oversold market, said Quincy Krosby, chief investment strategist at the Hartford, the financial services firm. The big question is whether or not the market can stay on an uptrend, or does it fizzle out?
Ms. Krosby said investors would be closely watching volume levels at the major exchanges over the next few days. Volume represents conviction, she said.
Thursday's volume on the New York Stock Exchange was 2.18 billion shares, and advancing issues outnumbered decliners four to three.
The major European indexes closed up 4 percent or more and have almost completely recovered from the steep losses they suffered on Monday, when fears about an imminent recession in the United States led to a broad sell-off.
The FTSE 100 index in London gained 4.75 percent and the benchmark DAX index in Germany moved higher by 5.93 percent.
Major Asian markets also recorded overnight gains, with the Nikkei 225 in Tokyo up 2 percent.
Investors in the United States may also have been buoyed by a drop in unemployment claims, a leading indicator of the job market. The claims fell more than expected last week, the Labor Department reported on Thursday, suggesting that January payrolls might not have fallen as much as analysts feared.
But the good news was balanced by the bad: sales of previously owned homes in 2007 fell to their slowest pace in a quarter-century, the National Association of Realtors said.
Over all, sales fell 13 percent in 2007, and the median price of a single-family home declined for the first time in at least four decades.
Investors worldwide continue to closely monitor the movements of central banks in the United States and Europe. The chairman of the European Central Bank has signaled that he is unlikely to cut interest rates, citing concern over rising inflation, just two days after the Federal Reserve surprised investors by slashing its benchmark rate by three-quarters of a percentage point.
The benchmark 10-year Treasury note fell 28/32, to 104 15/32. Its yield, which moves in the opposite direction, rose to 3.70 percent, from 3.60 percent.
Following are the results of Thursday's Treasury auction of 20-year inflation-protected securities:
[Illustration]CHARTS: The Dow minute-by-minute: Position of the Dow Jones industrial average at 1-minute intervals yesterday. (Sources: Associated Press; Bloomberg Financial Markets) Chart shows daily activity for stock market.; Freddie Mac Yields: Average for some Federal Home Loan Mortgage Corp. securities.(Source: F.H.L.M.C.) Chart shows line graph for oct.-jan.; Tax-Exempt Yields: Average yields for 20 general obligation bonds and 25 revenue bonds, plotted weekly. (Source: The Bond Buyer) Chart shows line graph for Revenue bonds.; The Favorites: Stocks held by largest number of accounts at Charles Schwab. Chart lists favorite stocks, hurray.