Stocks post a broad advance
Wall Street closed broadly higher Thursday, although the market was dragged down from its highs by a fresh sell-off in shares of mortgage lenders.
The dollar jumped against the yen, easing concerns about global speculators selling investments to pay off money borrowed in cheap yen.
Buyers were attracted to a variety of stocks, including retailers, industrial issues and major brokerages.
Investors today will be focused on the government’s report on February employment. The data could give a better sense of the economy’s health last month and whether recent recession jitters are warranted.
On Thursday the bulls were in control, apparently anticipating a good employment report. The Dow Jones industrial average gained 68.25 points, or 0.6%, to 12,260.70, and most other market indexes also climbed.
But the Dow was up as much as 111 points with two hours to go when it suddenly gave up more than two-thirds of its gains.
Some traders said the slide was triggered by rumors that Irvine-based mortgage lender New Century Financial would file for bankruptcy protection.
But Todd Clark, a trader at Nollenberger Capital Partners in San Francisco, said those rumors had been in the market for much of the session.
New Century’s shares dived $1.29, or 25%, to $3.87. The company declined to comment on the bankruptcy rumors, but after regular trading ended the firm said it had stopped making loans and was negotiating with its lenders.
Although analysts disagreed on whether New Century was the cause of the broader market’s pullback, a general slump in shares of mortgage firms and other financial companies led Wall Street down from its highs before it regained its footing.
The Dow fell as low as 12,224 before rebounding by the closing bell.
The Nasdaq composite index closed up 13.09 points, or 0.6%, at 2,387.73. It had been up 28 points.
The Standard & Poor’s 500 index ended up 9.92 points, or 0.7%, at 1,401.89.
Despite the afternoon slide, the market’s strength for much of the session encouraged the bulls. Winners topped losers by 3 to 1 on the New York Stock Exchange and by 3 to 2 on Nasdaq.
“Earnings are still good, the economy is still growing,” said Hans Olsen, who helps oversee more than $2 billion as chief investment officer at Bingham Legg Advisers in Boston. “After the craziness of last week, people will come back to the fundamentals and they’ll look at how companies are actually performing.”
Stocks slumped worldwide last week after a tumble in Chinese shares and amid fears that the U.S. economy was weakening more than investors had expected.
The Dow slid 4.2% last week. In the first four sessions this week it gained 1.2%.
Many foreign markets also have recovered a portion of last week’s losses. Asian markets were up sharply Thursday. Japan’s Nikkei index gained 1.9%, the Shanghai composite rose 1.1% and India’s Sensex index jumped 3.7%.
In Europe, stocks were broadly higher even though the European Central Bank raised its key short-term rate to 3.75% from 3.50%. The move was expected.
In other trading, near-term crude oil futures eased 18 cents to $61.64 a barrel in New York.
The 10-year Treasury note yield edged up to 4.51% from 4.49% on Wednesday.
Among the day’s market highlights:
* The dollar rose to 117.14 yen from 116.36 on Wednesday, allaying concerns that the yen would continue to strengthen. A rising yen was seen as one of the causes of last week’s market slump, as speculators rushed to sell investments they had purchased with yen loans in recent years.
* Some retailers rallied on reports of February sales. Nordstrom surged $2.26 to $52.68, J.C. Penney jumped $3.21 to $80.86 and Men’s Wearhouse soared $4.06 to $47.36.
Wal-Mart Stores slipped 5 cents to $47.88 despite raising its annual dividend 31% to 88 cents a share.
* Huntington Beach-based apparel maker Quiksilver fell 46 cents to $12.96 in regular trading, then slid to $11.81 after hours, following the company’s report that fiscal first-quarter earnings plunged 87% because of a poor winter sports season that has worsened in recent weeks.
The surf wear and ski gear maker earned $2.5 million, or 2 cents a share, in the quarter that ended Jan. 31, compared with $18.6 million, or 15 cents, a year earlier.
Sales rose 2% to $552 million.
* Some industrial issues rebounded. Steelmaker Nucor gained $3.17 to $63.12, Cummins added $2.60 to $137.20 and Timken advanced 74 cents to $29.57.
* On the downside, many mortgage lenders slid with New Century. Countrywide Financial lost 42 cents to $36.58. Fremont General fell 19 cents to $8.34.
* Brokerage stocks were mostly higher, although they ended down from their highs of the day. Goldman Sachs rose $4.35 to $199.94. Morgan Stanley gained $1.52 to $75.41.
