Stocks made a stunning comeback today, as investors snapped up some of the financial sector's stronger players and pumped money into the...
NEW YORK — Stocks made a stunning comeback today, as investors snapped up some of the financial sector’s stronger players and pumped money into the materials and transportation sectors.
The Dow Jones industrial average gained 164.79 to close at 11,433.71, after falling as much as 170 points in the early going.
Microsoft, one of the 30 Dow stocks, gained 90 cents to close at $27.34 a share. Boeing, also a Dow stock, advanced 86 cents to $62.57.
Broader stock indicators also rose. The Standard & Poor’s 500 index climbed 17.01 to 1,249.05. The S&P earlier came close to its July 15 trading low of 1,200.44 and its closing low of 1,214.91.
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The Nasdaq composite index gained 29.52 to 2,258.22.
A drop in crude below $101 a barrel also helped reverse early losses, particularly among automaker and transportation stocks.
Early in the day, most bank and brokerage stocks sold off on nervousness about Lehman Brothers’ announcement Wednesday that it plans to sell its investment management unit and spin off its commercial real-estate assets. The company is seeking to raise cash after making bad bets on holdings tied to real estate.
Traders and analysts appeared unimpressed with the steps outlined by the nation’s No. 4 investment bank, punishing the stock. Citigroup and Goldman Sachs lowered their ratings on the stock to “hold” from “buy.” Lehman fell $3.03, or nearly 42 percent, to close at $4.22.
“The steps they’re taking are being seen by Wall Street as too little, too late,” said Arthur Hogan, chief market analyst at Jefferies, referring to Lehman. “You’re looking at a company that was a $10 billion company last week that is a $3 billion company today.”
But later in the day, major names soared — including even the embattled Washington Mutual, which added 51 cents to $2.83.
“Not everybody’s in trouble, and people are realizing that,” said Anthony Conroy, managing director and head trader for BNY ConvergEx Group. He added, however, that the market is very rumor-driven right now — which can make for very volatile price movements.
Light, sweet crude fell $1.71 to settle at $100.87 a barrel on the New York Mercantile Exchange as a strengthening dollar added to investors’ buying power. Still, gasoline prices were up, and the market kept a watchful eye on Hurricane Ike amid worries that it could damage energy installations in the Gulf of Mexico.