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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Late surge lifts Dow to 150-point gain

Associated Press The Spokesman-Review

Wall Street shot higher in a last-minute advance Wednesday after careening through a session made turbulent by ongoing concerns about U.S. home loans and the credit market.

Stocks zigzagged for much of the day, with the Dow Jones industrials moving from positive to negative territory and back again before rallying to a gain of 150 points on bargain hunting during the last 20 minutes of trading. It was clear that any advance could be punctured by further bad news about soured subprime home loans, those made to borrowers with poor credit.

Wednesday’s trading further revealed the fractious nature of the stock market after a series of triple-digit swings in the Dow Jones industrials over the past week. On Tuesday, Wall Street gave back a big early gain and resumed the sharp slide it began last week, as concerns about home loan defaults and their fallout re-emerged when American Home Mortgage Investment Corp. reported troubles with its credit lines.

Economic news — including a better-than-expected report on pending home sales — as well as record oil prices failed to peel investors’ concentration much beyond credit.

“We’ve got a tug-of-war going on,” said Arthur Hogan, chief market analyst at Jefferies & Co. He contends Wednesday’s trading represents a microcosm of the market’s performance in recent weeks, when investors alternately focus on concerns like subprime loans and rising energy prices and positives like low unemployment, low interest rates and still-growing corporate profits.

The Dow rose 150.38, or 1.14 percent, to 13,362.37.

Broader stock indicators also advanced. The Standard & Poor’s 500 index rose 10.54, or 0.72 percent, to 1,465.81, and the Nasdaq composite index rose 7.60, or 0.30 percent, to 2,553.87.

Investors in recent sessions have succumbed to concerns about the credit markets that have dogged them for months. Stocks plunged at the end of last week amid such worries, taking the Dow down 585 points over Thursday and Friday.

Hogan said the market’s sell-off since its July 19 high — when the Dow closed above 14,000 for the first time — has at times drawn out some bargain hunters, as occurred late Wednesday. In an about-face from recent sessions, a crush of sell orders didn’t arrive late in the day to drive stocks down in the final minutes.

“We’ve got that dichotomy between fear and greed. This is greed kicking in,” he said of the rush of last-minute buy orders.

Bond prices, which move opposite yields, fell as stocks rallied. The yield on the benchmark 10-year Treasury note rose to 4.78 percent from 4.75 percent late Tuesday.

Besides the weak home loan market and credit worries, investors are facing concerns over the threat of inflation due to record-high crude oil prices.

Light, sweet crude fell $1.68 to $76.53 per barrel on the New York Mercantile Exchange after rising to a new all-time high of $78.77 during the session after the government reported a drop in inventories.

Despite gains by the major market indexes, declining issues outnumbered advancers by more than 9 to 7 on the New York Stock Exchange, where volume came to a heavy 2.42 billion shares compared with 1.53 billion traded Tuesday.

The Russell 2000 index of smaller companies rose 1.80, or 0.23 percent, to 777.92.

Worries about U.S. home loan defaults haven’t affected only the U.S. markets; they have been rippling through the world markets, too.

In Asian trading, Japan’s Nikkei stock average fell 2.2 percent, Hong Kong’s Hang Seng index dropped 3.2 percent, and China’s Shanghai Composite Index dipped 3.8 percent.

Britain’s FTSE 100 fell 1.72 percent, Germany’s DAX index fell 1.45 percent, and France’s CAC-40 fell 1.68 percent.