Stocks Carve Out Rebound After Sharp Selloff

By: AP
By: AP

NEW YORK – Wall Street shook off more signs of global economic troubles Tuesday and carved out a sizable gain as investors awaited the Federal Reserve's next move on interest rates. The major indexes each rose more than 1 percent, including the Dow Jones industrials, which jumped 200 points.

The early surge came after the Dow fell more than 500 over two sessions, a drop that made many stocks look more attractive to investors in search of bargains. A worldwide rally after huge losses Monday helped lift sentiment.

Investors managed to take bad economic news with relative calm, holding on to most of its gains after the Conference Board said its index of consumer confidence fell to its lowest level in 41 years, with a reading of 38. That was well below the 51 analysts expected.

Other casualties from the global crisis piled up Tuesday, but the market seemed to have come to terms with the fact that bad economic news will continue to stream in. Whirlpool Corp. said it will cut about 5,000 jobs by the end of 2009, Iceland said it needs $6 billion and Germany said Pakistan must secure a loan from the International Monetary Fund within a week.

In midmorning trading, the Dow Jones industrial average rose 211.70, or 2.59 percent, to 8,387.47 after having risen 331 points in the early going. The big moves weren't a surprise, given the huge swings stocks have shown in the past six weeks since the bankruptcy filing of Lehman Brothers Holdings Inc. Only two of the 19 trading days in October haven't ended with the Dow up or down by triple digits.

Broader stock indicators also jumped Tuesday. The Standard & Poor's 500 index rose 14.62, or 1.72 percent, to 863.54, and the Nasdaq composite index rose 24.65, or 1.64 percent, to 1,530.55.

The Russell 2000 index of smaller companies rose 3.98, or 0.88 percent, to 452.33.

Advancing issues outnumbered decliners by about 3 to 1 on the New York Stock Exchange, where volume came to 230.1 million shares.

Bond prices fell as some investors left the safety of government debt. The yield on the three-month Treasury bill, regarded as the safest investment around and an indicator of investor sentiment, rose to 0.79 percent from 0.77 percent Monday. A higher yield indicates a dip in demand. The yield on the benchmark 10-year Treasury note rose to 3.79 percent from 3.69 percent late Monday.

The dollar was mixed against other major currencies.

Light, sweet crude rose 35 cents to $63.57 on the New York Mercantile Exchange. For much of 2007 the rise in oil often weighed on the stock market but after plunging from its July 11 high of $147.27, analysts have attributed some of the drop to expectations of a global economic slowdown that will hurt demand. So rather than sliding, stocks in the past month have sometimes been given a boost when oil rises.

Investors worldwide snapped up stocks after Monday's rout. Japan's Nikkei stock average jumped 6.41 percent and Hong Kong's Hang Seng index surged 14.4 percent — its biggest gain in 11 years — a day after plunging more than 12 percent. In afternoon trading, Britain's FTSE 100 rose 3.33 percent, Germany's DAX index jumped 8.39 percent, and France's CAC-40 rose 2.65 percent.

The gains come as Fed policymakers convene a regularly scheduled meeting on interest rates. The central bank is expected to lower its fed funds rate by a half-point to 1 percent on Wednesday, a move that could bolster some investors' confidence by making borrowing less expensive.


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