Late Rally Helps Lift U.S. Stocks; Europe Is Reeling
U.S. stocks closed mixed Wednesday as a late-day rally erased early losses. But European markets were pounded, pushing year-to-date declines on some continental bourses past 20%.
Meanwhile, crude oil prices spiked more than 3% to a new 12-year high on concerns about low U.S. inventories.
Wall Street was headed for a third straight day of losses as a looming U.S.-led attack on Iraq and heavy selling in Europe weighed on sentiment as the U.S. trading day began.
But in the last half an hour stocks turned positive on heavy volume. A rumor, later denied, that terrorist leader Osama bin Laden had been captured helped spark the late rally.
“It’s like when you’re in the middle of the storm, you can pick up your head and wipe off your brow,” said Robert Mikkelsen, a trader at Advest Group Inc.
He said investors were taking advantage of low prices after a recent hammering that had pushed the blue-chip Dow Jones industrial average close to multiyear lows set in October.
The Dow, after falling more than 100 points in the early going, ended with a gain of 28.01 points, or 0.4%, at 7,552.07. The Standard & Poor’s 500 index was up 3.46 points, or 0.4%, at 804.19. The index earlier had fallen below the psychologically important 800 level.
The technology-heavy Nasdaq composite index gained 7.77 points, or 0.6%, to 1,279.24.
Trading was well above recent levels, and the heaviest since mid-January. But despite gains in the major indexes, losers outnumbered winners by 3 to 2 on the New York Stock Exchange and by a slim margin on Nasdaq.
Fears about an impending U.S.-led attack on Iraq weighed on shares for most of the day, analysts said.
“Geopolitical jitters are dominating the activity in the stock markets around the world,” said Alan Ackerman, strategist with Fahnestock & Co. “The markets here and abroad are hitting multiyear lows and that continues to challenge confidence.”
Britain’s blue-chip index, the FTSE 100, ended down 4.8%, setting a fresh 7 1/2-year low, as war fears kept buyers at bay.
Key indexes fell 3.6% in France, 4.1% in Holland and 4.4% in Germany, where the DAX index is off 23.8% year-to-date.
In Japan the Nikkei-225 index rebounded 1% to 7,943.04 on expectations the government would announce a new plan to help shore up stocks, which this week fell to 20-year lows. One step might be to simply ask big investors to restrain their selling.
Among the day’s highlights:
* Crude oil for April delivery jumped $1.11 to $37.83 a barrel on the New York Mercantile Exchange. Prices jumped as big drops in U.S. oil and gasoline inventories deepened fears about dwindling supplies amid the run-up to a possible Mideast war.
* Exxon Mobil, the world’s biggest oil company and a Dow member, fell 51 cents to $34.06. The stock got hit after J.P. Morgan cut its investment rating on global oil stocks to “neutral” from “overweight,” saying the group’s shares were close to peak levels and could struggle to outperform further.
* Schering-Plough lost 13 cents to $15.75 after trading as low as $15.29. The drug company said the Securities and Exchange Commission may charge the firm and its chief executive, Richard Kogan, with improperly releasing material information to select investors in October, in violation of the SEC’s Regulation Fair Disclosure.
* Duke Energy jumped after the utility said it will cut capital expenditures by $200 million this year to free up cash to pay off debt and maintain its dividend. Duke rose 84 cents to $13.25.
* AMR, parent of American Airlines, gave up 18 cents, or more than 11%, to close at $1.41, adding to Tuesday’s 34% drop.
