NEW YORK (MarketWatch) — U.S. stocks Tuesday made a swift, late-session rebound that
drove the Dow industrials up more than 3% in the last 40 minutes of trading, after a
report that European officials were moving toward a plan to recapitalize the region’s
banks.
The final-hour rebound ensured the S&P 500 and Nasdaq Composite indexes stayed
out of bear-market territory, a status they had flirted with during the session. It
also inspired hope that markets were finding support after breaking through some key
technical levels in the prior session.
S&P 500 Index ended up 24.72 points, or 2.3%, to 1,123. 95. Financial stocks
powered past the index’s nine other sectors, closing up 4.1%.
During the session, the S&P 500 had fallen at least 20% from its April 29 high
of 1,363.61. A close at the lower, intraday levels would have been considered a bear
market by many technical analysts.
The late turnaround, following the index’s break below its August lows of about
1,100 in Monday’s session, was a good sign, according to one stock watcher.
“The late-day rally — spurred on by the FT article discussing bank aid — took most
of the market with it,” said Dan Greenhaus, chief global strategist at BTIG LLC.
“That the market fell below 1,100 only to surge higher, closing at nearly 1,125, is
certainly a positive from a technical standpoint,” he wrote.
The Financial Times reported on its website that European Union ministers were
examining ways of coordinating recapitalizations of financial institutions. Details
were scant, but the newspaper quoted Olli Rehn, European commissioner for economic
affairs, saying “capital positions of European banks must be reinforced to provide
additional safety margins and thus reduce uncertainty.” Read story about EU officials
studying the recapitalizing of banks.
For most of the session, stocks had headed lower on worries about European debt.
Remarks from Federal Reserve Chairman Ben Bernanke, which hinted at further steps to
stimulate the economy, failed to shift the major indexes out of the red.
“There’s a lot of uncertainty here, and doubt about whether agencies or government
bodies can do anything about it,” said Howard Silverblatt, senior index analyst at
Standard & Poor’s, of the situation in the United States as well as abroad.
“Earnings are the only thing that could calm this market. If they do not, what is
holding us up, as far as the market goes?”
Alcoa Inc. kicks off third-quarter earnings reports next week, with analysts
trimming profit expectations for the aluminum producer. Read full report on
expectations for Alcoa.
The Dow Jones Industrial Average ended up 153.41 points, or 1.4%, to 10,808.71. A
6.5% jump in J.P. Morgan Chase & Co. shares led gains shared by all but four of
the index’s 30 components. The Dow lost 251 points at session lows and leapfrogged
377 points in the last 40 minutes of trading.
After bouncing between gains and losses for much of the session, the Nasdaq
Composite Index ended up 68.99 points, or 3%, at 2,404.82. At session lows of 2,299,
it was off 20% from its April 29 closing high.
For three stocks rising, roughly two fell on the New York Stock Exchange, where
about 1.6 billion shares traded hands. Composite volume of 6.9 billion topped the
year-to-date daily average of 4.35 billion.
Apple Inc. partially recovered to end down 0.6% as the company debuted its new
iPhone, its first big product event without Chief Executive Steve Jobs running the
show. Read more on Apple in Tech Stocks.
In testimony to the Joint Economic Committee of Congress, Fed chief Bernanke said
the central bank was ready to take more action if necessary to bolster the U.S.
economic recovery. Read more on the Fed.
Europe’s debt debacle continued to rattle investors, with Greece’s finance minister
on Tuesday saying the nation can cover pensions, salaries and bondholders through the
middle of next month. Read more on Greece’s fiscal plan.
The Mediterranean nation had said it would start running out of cash in the middle
of this month, and European leaders have signaled they could not make a final
decision until later in October on the next round of loans to Athens.
“Greece is close to running out of money and the next tranche of funds to stave off
— for now — an imminent default has to be assigned by midmonth,” noted Mark Luschini,
chief investment strategist at Janney Montgomery Scott.
Gold futures for December delivery fell $41.70 to end at $1,616 an ounce on the
Comex division of the New York Stock Exchange, while crude futures finished below
$76 a barrel for the first time in more than a year, losing $1.94 to settle at $75.67
a barrel. Read more on gold futures and read more on oil futures.
