Stocks reverse losses as commodities end off lows
Some stock market bulls are looking to latch onto any bit of good news these days -- even if it’s not really news.
After trading lower for most of Monday’s session, Wall Street rebounded in the final hour of the session. The Dow Jones industrial average closed with a gain of 1.36 points, to 8,764.49, recouping a 130-point decline. Other major indexes finished with modest losses in light trading overall.
Some traders said the last-hour rally was sparked by comments from Nobel Prize-winning economist Paul Krugman, who said in a London speech that he would “not be surprised if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer.”
Krugman has been mostly downbeat about the economy’s future because he doesn’t believe that the Obama administration has done enough to ensure a strong recovery.
But he already has said that the recession could end this summer. He told an audience in Hong Kong on May 22 that the end of the downturn may be dated -- after the fact -- to August.
Krugman’s concern remains that the recovery won’t look like much.
“Almost surely unemployment will keep rising for a long time, and there’s a lot of reason to think that the world economy is going to stay depressed for an extended period,” he said in his speech, according to Bloomberg News.
Evidently, though, all the bulls have to hear is “recession over” to shovel more money into stocks.
That’s a good thing for every investor who’s still riding the spring rally. But it’s vexing the folks who are waiting for a significant setback before hopping aboard.
Since the surge began March 10, the Standard & Poor’s 500 index hasn’t had a pullback deeper than 5.4% before buyers jumped back in.
“It’s tough to keep this market down,” said Todd Leone, head of block trading at Cowen & Co. in New York.
Financial stocks in the S&P; 500 finished 1.1% higher Monday, more than any other broad industry group, after surging late in the day along with the rest of the market. Also helping the sector was speculation about which banks will be allowed to repay federal bailout money. The government may issue that list as early as today.
JPMorgan Chase climbed 2.4%, while American Express rose 2.8%.
In other market highlights:
* The S&P; 500 eased 0.95 of a point, or 0.1%, to 939.14. It’s up 39% from its 12-year low reached March 9. The Nasdaq composite index fell 7.02, or 0.4%, to 1,842.40.
* Three stocks fell for every two that rose on the New York Stock Exchange.
* Commodity prices, which have been rallying in recent weeks, weakened Monday, pushing down the stocks of raw-material producers. But because they close an hour before the stock market, U.S. futures exchanges missed out on the effect of Krugman’s speech. Oil futures fell 35 cents to settle at $68.09 a barrel on the New York Mercantile Exchange, while gold dropped $10.10 to $951.70 an ounce.
* Monday marked the arrival of Travelers and Cisco Systems in the Dow, replacing Citigroup and General Motors. Travelers rose 47 cents to $43.92, while Cisco was unchanged at $19.87.
* Overseas, key stock indexes fell 0.8% in Britain, 1.4% in Germany and 1.5% in France. Japan’s Nikkei stock average gained 1%.
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The Associated Press was used in compiling this report.
