YOU ARE HERE: LAT HomeCollections


After early doldrums, Dow soars 552 points

November 14, 2008|Walter Hamilton | Hamilton is a Times staff writer.

NEW YORK — Stocks staged a powerful rally Thursday after three straight down days, with the Dow Jones industrial average surging more than 550 points.

After a dreary first half of the trading session, the blue-chip average shot up more than 870 points from its low for the day and closed near its high.

The gains for the Dow and other major stock indexes were their biggest this month and came despite what has come to be a daily litany of depressing economic news.

Market watchers were relieved to see the indexes bounce back strongly after falling near or below last month's five-year lows. If nothing else, some said, it signaled that the market had established a floor under which it would be unlikely to fall unless the economic situation unexpectedly got even worse.

"The panic has subsided, and a temporary recovery seems to be getting underway," said Phil Roth, market analyst at New York brokerage house Miller Tabak & Co. "Is this a new bull market? No way of telling."

The Dow ended the day up 552.59 points, or 6.7%, at 8,835.25.

The 30-stock average dipped below 8,000 in the morning -- a level it hasn't closed below in the current 13-month bear market -- but turned around almost immediately, keeping above both its closing and intraday lows set last month.

The blue-chip indicator remains down 33% for the year and 38% from its October 2007 peak.

The Standard & Poor's 500 index jumped 58.99 points, or 6.9%, to 911.29. The S&P fell to a new intraday bear-market low before recovering. The Nasdaq composite index rose 97.49 points, or 6.5%, to 1,596.70.

Advancing stocks outpaced decliners nearly 3 to 1 on the New York Stock Exchange. All 10 broad industry groups in the S&P 500 were in the black.

Oil prices, which have been sliding sharply since July, also rebounded. Crude futures rose $2.08 to $58.24 a barrel.

That sent energy stocks in the S&P 500 up 11%, more than any other sector. Exxon Mobil jumped 9.4%, making it the biggest contributor to the S&P 500's advance. Chevron gained 13%.

Yields on Treasury bonds surged along with stocks, with the 10-year note rising to 3.81% from 3.66% on Wednesday.

There didn't appear to be a specific trigger for the overall stock rally other than a petering out of selling pressure. In fact, there was no shortage of bad news.

Initial weekly jobless claims jumped above the half-million mark to their highest level since just after the September 2001 terrorist attacks. The total number of people receiving unemployment benefits reached a 25-year high.

Wal-Mart Stores cut its annual profit projection even though its third-quarter results were better than expected. Intel slashed its fourth-quarter sales forecast by $1 billion late Wednesday, raising further doubts about the prospects for electronics and big-ticket consumer items a day after Best Buy issued a gloomy profit warning.

Despite those reports, shares of Wal-Mart rose 4.4%, Intel climbed 6.7% and Best Buy, which fell 8% on Wednesday, bounced back with a 7.4% gain.

Investors debated whether stocks now could muster a sustained recovery.

Though a steady dribble of bad news is likely to continue to weigh on stocks, many analysts say the market is overdue for at least a moderate rally.

Their argument: With battered stock prices already reflecting expectations for a dismal economy, and with investors having taken a huge amount of money out of the stock market, even a few signs of economic stability could unleash a so-called relief rally.

The market has recently experienced a succession of explosive rallies -- including the Dow's 889-point surge on Oct. 28 -- only to see prices slide back.

The rallies have been driven in part by so-called short covering, in which investors who had bet on a drop in the market are forced to buy stocks quickly when rising prices cause their bearish wagers to lose money.

"We've seen these short-covering rallies before," said John Bollinger, head of Bollinger Capital Management in Manhattan Beach. "They go for a week or 10 days but they run out of steam because there isn't real interest in buying securities. This is the test now to watch over the next week or two to see whether genuine demand comes in."


Los Angeles Times Articles