Wall Street capped a volatile week with sharp gains today as oil prices tumbled and after Federal Reserve Chairman Ben Bernanke said inflation...
NEW YORK — Wall Street capped a volatile week with sharp gains today as oil prices tumbled and after Federal Reserve Chairman Ben Bernanke said inflation pressures are likely to moderate.
The Dow Jones industrial average closed up 197.85 at 11,628.06, near its highs of the session.
Microsoft, one of the 30 Dow stocks, added 66 cents to $27.84. And Boeing, another Dow stock, jumped $2 to $65.55
Broader stock indicators also rose. The Standard & Poor’s 500 index rose 14.48 to 1,292.20, and the Nasdaq composite index rose 34.33 to 2,414.71.
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Speculation that Lehman Brothers Holdings could be sold helped buoy the financial sector and the overall market.
Analysts warned this week that the investment bank could book large write-downs for bad debt. But reports today that Korea Development Bank is considering buying the company sent investors rushing for the stock. Lehman rose 69 cents, or 5 percent, to $14.41 but finished well off its highs of the session.
Investors also appeared cheered by an inflation forecast from Bernanke who said at the Kansas City Fed’s annual economic symposium that inflation pressures should moderate this year amid tepid economic growth. But he also added that the inflation forecast remains “highly uncertain.”
John Massey, senior portfolio manager at AIG SunAmerica Asset Management, said investors are encouraged by Bernanke’s comments on interest rates and by the possibility of a buyer for Lehman.
“We’re seeing the potential for maybe another white knight,” he said, referring to prospects of a deal to acquire all or part of the investment bank.
The run-up today left stocks with mostly modest losses for the week that again saw a series of triple-digit moves in the Dow. The Dow is down 0.27 percent, the S&P 500 is off 0.46 percent and the technology-heavy Nasdaq is down 1.54 percent.
Bond prices pulled back as investors rushed from the safety of government debt to stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.88 percent from 3.83 percent late Wednesday.
The dollar rose against other major currencies, while gold prices fell.
Massey cautioned against making too much of the market’s moves given the light volume this week. With traders squeezing in late-summer vacations, Wall Street has shown erratic trading. The Dow industrials lost more than 300 points over Monday and Tuesday before ending moderately higher Wednesday and finishing mixed Thursday.
“The light volumes are really sort of the reasons behind why you’ve got some outsize moves. I think the issues over all for the economy and the market are fairly well understood,” he said. “The market is of this mind-set that we’re going to continue to be flattish to down.”