After 380-point drop, major industrials close 401 points up; other indexes see similar gains
NEW YORK – A stock market as difficult to fathom as it is volatile pulled off another stunning U-turn on Thursday, transforming a 380-point loss for the Dow Jones industrials into a 401-point gain.
Was it the government’s bailout beginning to have an effect? The credit markets finally beginning to loosen up? Investors looking for a bottom in stocks?
Wall Street seemed sure of this much: The whipsawing will continue. So buckle up.
“You’re not going to see 50-point ranges, you’re going to see two-, three-, four-hundred point ranges,” said Woody Dorsey, president of Market Semiotics, a financial forecasting firm in Castleton, Vt.
At any other time in the history of the stock markets, a day like Thursday would be enough to draw a double take. But in these extraordinary times, it was the second-calmest day of the week.
The Dow set a record on Monday with a 936-point gain. After a 77-point loss on Tuesday, a relative breather, sellers stampeded on Wednesday and drove the Dow back down 733.
Despite Thursday’s stock-market gain, the economic picture did not look much rosier.
Prices stayed flat overall in September, the government reported – meaning inflation is in check, at least for now. Gas, clothes and new cars got cheaper, and food, medical care and other items got more expensive.
“Inflation has peaked,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics, predicting huge declines in inflation readings.
But the paychecks Americans use to pay for all of it are shrinking. Weekly wages dropped by 2.5 percent in September from a year ago.
The U.S. economy is suffering from a litany of problems: falling wages, weak consumer spending, tight credit, slumping home prices and rising job losses. Still, on Wall Street, other major averages showed gains similar to the Dow’s 4.7 percent. The Standard & Poor’s 500 gained more than 4 percent, and the Nasdaq composite index added 5.5 percent.
But one day’s climb won’t do much to repair investors’ portfolios. Since Oct. 9, 2007, when the Dow topped 14,000, investors have lost $8.3 trillion from pension funds, college savings plans, 401(k)s and other investments.
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