Dow Rises 90 as Yen Rebounds; Yields Climb
U.S. stocks rose sharply Wednesday as the yen recovered from an eight-year low amid speculation that the Bank of Japan might intervene to prop up the Japanese currency.
The dollar rose against most other major currencies and commodities prices slid after Russia imposed emergency foreign exchange limits on its commercial banks in a drastic step to bolster the battered ruble.
“It’s too early to come out and say the worst is over, because the market is vulnerable to quite a few things that won’t change overnight, like Asia,” said Charles Payne, an analyst at research firm Wall Street Strategies.
The Dow Jones industrial average closed up 90.11 points, or 1%, at 8,552.96 after gaining more than 100 points. The blue-chip index recouped much of Tuesday’s 112-point slide.
On the New York Stock Exchange, breadth was good, with advancing issues outpacing declining issues 2,185 to 825, with 713.64 million shares changing hands.
“A lot of portfolio managers like ourselves were looking for bargains and found them,” said Hugh Johnson, chief investment officer at First Albany.
The Dow is now 8.4% below its record close of 9,337 on July 17 but still up about 8% on the year.
Rumors that Japan was preparing to intervene to boost the yen pushed it higher.
“This also weakened bonds, and so some money shifted back into stocks,” Johnson said. “A little bit of confidence was restored in the market, but there is still uneasiness.”
The steadier yen injected some firmness into global stocks, with technology and small caps making the best gains.
The technology-heavy Nasdaq composite index rose 32.83 points, or 1.8%, to 1,825.53. The small-cap Russell 2,000 rose 7.95 points, or almost 2%, to 408.55.
The yield on the 30-year Treasury bond rose to 5.62% from 5.60% on Tuesday.
The dollar ended at 1.7865 German marks, compared with 1.7815 on Tuesday. The dollar fell to 146.44 Japanese yen from 147.27.
Rallies in stocks are still being treated cautiously.
“This is a relief type of upswing because we were really slammed yesterday,” said Paul Rich, a trader at BT Brokerage.
“Economic conditions have not changed--they are still fantastic--but investors believe there will be more downside,” Rich added.
U.S. corporate earnings also worried investors as several companies warned about profits and the third-quarter pre-announcements season nears.
Among Wednesday’s highlights:
* CheckFree Holdings closed down $9.81 at $19.94 after the provider of electronic data-processing services warned of disappointing revenue growth.
* GeoCities rose $8.19 to $45.50 as the Web site host’s stock soared for a second day after an initial public offering at $17 a share Tuesday.
* Adobe Systems fell $3.44 to $27.38 as the software maker warned of a possible loss in the third quarter and announced plans to cut costs by up to 10% to save between $50 million and $60 million a year. The plan includes eliminating 240 to 300 regular employee and contractor positions.
The benchmark Commodities Research Bureau index of 17 traded commodities prices ended down 0.43% at 202.02 points, a five-year low.
Overseas, London’s FTSE 100 closed at 5,462.2, up 29.4 points, or 0.54%. In Tokyo, the 225-share Nikkei average closed at 15,378.97, down 28.02 points, or 0.18%.
Market Roundup, D8
