A line in the sand? Stocks again manage to rally off May lows
Memo from Wall Street: The volatility will continue until morale improves!
Stocks did another about-face on Wednesday, rebounding sharply after two losing sessions. The Dow Jones industrial average jumped 225.52 points, or 2.3%, to close at 10,249.54.
Significantly, key indexes managed to bounce after falling on Tuesday to near levels where they also had bounced last week and the previous week. In other words, the bulls appear to have drawn a line in the sand, and the bears once again failed to storm that line.
The Standard & Poor’s 500 index, which closed at 1,070.71 on Tuesday, surged 2.6% to 1,098.38 on Wednesday, led by beaten-down energy issues.
And as has been typical lately, most of the day’s fireworks occurred late in the session. In this case, the Dow rallied 145 points in the final 90 minutes.
Some analysts pointed to President Obama’s speech in Pittsburgh, in which he suggested that the government’s report Friday on May employment trends would be encouraging.
"We expect to see strong jobs growth in Friday's report," Obama said. Some bears who have been shorting the market, betting on a weaker-than-expected jobs number, might have taken that as a cue to buy stocks and close out their bets, some traders said.
The economy created a net 515,000 new jobs last month, including temporary census-worker jobs, according to the average estimate of analysts surveyed by Bloomberg News. The April jobs gain, by contrast, was 290,000 positions.
If the bulls had a reason to be disappointed Wednesday it was over trading volume, which was relatively weak. The pattern over the last month has been heavy volume on sell-offs and lighter volume on rallies.
Still, Dan McMahon, head of institutional trading at brokerage Raymond James & Associates in New York, noted that despite a lengthening list of worries dogging the market -- Europe’s debt mess, the Gulf of Mexico oil spill, the risk of war between North and South Korea, and new Mideast tensions -- stocks have been stuck in a trading range since May 19.“Even in that context, there isn’t unabated selling,” McMahon said of the worries list. That gives the bulls more reason to believe the market is trying to carve out a bottom.
-- Tom Petruno
Photo: President Obama speaking in Pittsburgh on Wednesday. Credit: Keith Srakocic / Associated Press