Volatile market swings up nearly 300 points
NEW YORK – Wall Street pulled off a stunning comeback Wednesday, surging higher in late trading and wiping out what looked to be yet another massive decline. The Dow Jones industrials, down more than 323 points in earlier trading, ended the day with an advance of just under 300 points.
Such volatility has become a hallmark of Wall Street’s performance in recent months amid the ongoing housing and credit crisis and growing fears of recession. And, after five straight days of pullbacks, a rebound was to be expected. But analysts saw some positive signs in the day’s trading.
The Federal Reserve’s decision Tuesday to lower its benchmark federal funds rate by 0.75 percentage point to 3.5 percent, while met with some skepticism, did give intrepid investors a reason to buy Wednesday.
Still, analysts were mindful that in the past months, Wall Street has been known to soar one day and succumb the next, and that there are still many economic unknowns for the market to weather. And, given that stocks are so badly beaten down, bargain hunting played a part in Wednesday’s turnaround.
According to preliminary calculations, the Dow Jones industrial average rose 298.98, or 2.50 percent, to 12,270.17, having fallen as much as 323.29 earlier.
Before Wednesday’s session, the Dow had fallen nearly 10 percent since the start of the year, and it was down more than 15 percent since its record close of 14,164.53 on Oct. 9.
Wednesday’s swing from negative to positive territory of 631.86 points is the largest point swing since July 24, 2002, according to Dow Jones Indexes. The largest intraday point swing, a metric that Dow started calculating in July 1995, was a 721-point swing on April 14, 2000.
Broader stock indicators also surged Wednesday. The Standard & Poor’s 500 index rose 28.10, or 2.14 percent, to 1,338.60, while the Nasdaq composite index rose 24.14, or 1.05 percent, to 2,316.41.
Battered small-cap companies – which rely heavily on borrowing to grow their businesses – got a lift Wednesday. The Russell 2000 index of smaller companies rose 21.86, or 3.26 percent, to 693.43.
Before the turnaround in U.S. stocks, European stocks closed sharply lower on economic worries and escalating uncertainty about the European Central Bank’s willingness to lower rates. Britain’s FTSE 100 closed down 2.28 percent, Germany’s DAX index fell 4.88 percent, and France’s CAC-40 fell 4.25 percent.
In earlier Asian trading, Japan’s Nikkei stock average closed up 2.04 percent after falling 5.7 percent Tuesday. Similarly, Hong Kong’s Hang Seng index surged 10.72 percent – its biggest gain in 10 years – after falling 13.7 percent in the previous two sessions.