MARKET REPORT : Dow rises 68.88 after bumpy ride
Posted on Thursday, August 21, 2008
NEW YORK — Wall Street scored a moderate gain after a volatile session Wednesday that saw the major indexes ratchet up and down on the seesawing price of oil and mixed feelings about the financial sector.
The Dow Jones industrial average rose 68. 88, or 0. 61 percent, to 11, 417. 43 after being down by nearly 60 points and up more than 100. Concerns about inflation and the financial sector led the Dow to post its worst two-day performance since late June on Monday and Tuesday with an overall drop of about 310 points.
Concerns about mortgage financiers Fannie Mae and Freddie Mac initially dragged down financials. Wall Street is nervous that the government-chartered companies will need a bailout from the Treasury Department, a move that could wipe out shareholders’ equity. Fannie Mae shares tumbled nearly 27 percent, while Freddie Mac shares lost 22 percent.
Fannie Mae is the Federal National Mortgage Association, and Freddie Mac is the Federal Home Loan Mortgage Corp.
But because financial stocks have fallen so far over the past few days, some traders appeared to be covering many of their short positions, which drove a large portion of bank and brokerage stocks higher late in the day, said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners Inc. Short-covering is a way to offset a bet that a stock will fall.
Some stocks had turned higher earlier in the day as well after Fannie Mae Chief Executive Daniel Mudd said the concerns about the company’s financial position are overblown.
“They haven’t offered anything and we haven’t asked for anything,” Mudd said, referring to the federal government in a public radio interview Wednesday morning. “I don’t anticipate that they will do that.” Meanwhile, oil prices finished higher — bad news for consumers, but a boost to energy company stocks, which also attracted buying Wednesday.
Broader stock indicators also ended Wednesday with a gain. The Standard & Poor’s 500 index rose 7. 85, or 0. 62 percent, to 1, 274. 54, while the Nasdaq composite index rose 4. 72, or 0. 20 percent, to 2, 389. 08.
The Russell 2000 index of smaller companies rose 1. 57, or 0. 22 percent, to 731. 60.
Advancing issues outnumbered decliners by a ratio of about 8-to-7 on the New York Stock Exchange, where volume came to 4. 45 billion shares.
Light, sweet crude rose 45 cents to $ 114. 98 per barrel on the New York Mercantile Exchange, after alternating between gains and losses.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3. 79 percent from 3. 84 percent late Tuesday.
The dollar rose against other major currencies. Gold prices also rose.
Overseas, Japan’s Nikkei stock average slipped 0. 10 percent. Britain’s FTSE 100 rose 0. 97 percent, Germany’s DAX index advanced 0. 56 percent, and France’s CAC-40 rose 0. 76 percent.
FEEDBACK:
Something to say about this topic? Submit a Letter to the Editor online
