Investors shop for bargains too
Stocks rose Friday as investors engaged in a bit of day-after-Thanksgiving bargain hunting and news reports depicted no shortage of holiday shoppers in the nation’s stores.
The day’s gains put the Standard & Poor’s 500 index back in positive territory for the year but weren’t enough to erase the major indexes’ losses for the week. And with many Wall Street players out for a long weekend, observers cautioned against making much of the rebound.
“While I’d love to celebrate this rally, it is on very thin volume and we have to really wait until next week to get a sense of the true direction of this market,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.
But it’s a good sign that stocks didn’t extend Wednesday’s slide, he added.
“Maybe the day off for Thanksgiving enabled investors to reflect that maybe the bottom isn’t falling out of the economy,” he said.
The Dow Jones industrials rose 181.84 points, or 1.4%, to 12,980.88. The Standard & Poor’s 500 index advanced 23.93 points, or 1.7%, to 1,440.70, putting it up 1.6% for the year.
The Nasdaq composite index rose 34.45 points, or 1.3%, to 2,596.60, and the Russell 2,000 index of smaller companies rose 14.73 points, or 2%, to 755.03.
Advancing issues outnumbered decliners by about 5 to 1 on the New York Stock Exchange.
For the week, the Dow lost 1.5%, the S&P; slid 1.2%, the Nasdaq gave up 1.5% and the Russell 2,000 slumped 1.9%.
The government bond market showed little change in sentiment. The yield on the 10-year Treasury note edged down to 4% from 4.01%.
The price of gold jumped, and the dollar was mixed against other major currencies. In New York trading, gold futures climbed $26.40, or 3.3%, to $824 an ounce. For the week, the contract is up 4.9%.
Gold has surged 30% this year as the dollar’s decline to record lows against the euro and climbing energy costs sparked demand for the metal as a hedge against inflation. The dollar is down 10% to its lowest value ever against a basket of six currencies, including the euro and the yen.
Oil climbed back into uncharted terrain. Crude futures rose 89 cents to a record $98.18 a barrel. Heating oil also climbed to a record.
The S&P; 500 financials index, which dropped to a two-year low Wednesday, rose Friday for the first time in seven days, adding 3.1%.
Citigroup moved up 97 cents, or 3.2%, to $31.70. The Wall Street Journal reported that Citigroup, Bank of America and JPMorgan Chase were ready to move forward with a plan to revive credit markets with a fund to buy assets from so-called structured investment vehicles.
Bank of America gained $1.01, or 2.4%, to $43.15. JPMorgan climbed $1.27, or 3.1%, to $41.95. Wells Fargo, the second-largest U.S. mortgage lender, added 92 cents, or 3.1%, to $30.84.
“The banks are coming around,” said Andrew Seibert, who helps manage $400 million at Nextier Wealth Management in Pittsburgh. “People that are buying them are saying, ‘There’s value here and these stocks are reasonably priced at this range. I’m going to dip my foot in the water.’ ”
Shares of MBIA and Ambac Financial Group Inc., the world’s two biggest bond insurers, jumped after the bailout of rival CIFG Guaranty suggested that the industry might get the financing it needed to avoid credit-rating downgrades. MBIA gained $1.96, or 6.1%, to $34.14. Ambac rose $1.41, or 5.8%, to $25.55.
E-Trade Financial jumped $1.07, or 25%, to $5.33 amid speculation that the company was in talks to strike a deal for all or a portion of its assets. A CNBC report, which cited undisclosed sources, named TD Ameritrade Holding and Charles Schwab as possible suitors. E-Trade shares remain down 76% for the year.
TD Ameritrade rose 82 cents, or 4.5%, to $18.90, and Schwab rose 75 cents, or 3.3%, to $23.56.
Mortgage giants Freddie Mac and Fannie Mae, which plunged Tuesday after Freddie Mac posted a $2-billion third-quarter loss, rallied Friday. Freddie Mac rose 47 cents, or 1.8%, to $26.47. Fannie Mae, which reported a $1.4-billion loss earlier in the month, rose $2.97, or 10%, to $32.20.
On the traditional first day of the holiday shopping season, retailing stocks in the S&P; 500 surged 2.7%, with 28 of 30 companies gaining.
“It seems like there’s a lot of traffic in the stores, so that’s a positive,” said Michael Nasto, senior trader at U.S. Global Investors Inc. in San Antonio. “People might be thinking the sell-off we had the last few days was overdone.”
Circuit City Stores jumped $1.06, or 19%, to $6.51, and Target climbed $3.07, or 5.7%, to $57.17. Wal-Mart Stores rose 87 cents, or 1.9%, to $45.73.
Among department stores, Macy’s climbed $1.53, or 5.4%, to $30.03. Sears Holdings rose $2.26, or 2%, to $112.58. J.C. Penney gained $1.23, or 3.1%, to $41.30.
Retailing stocks, however, remain down an average of 17% for the year on concern that rising energy prices and falling home values will depress spending.
Overseas, stocks rallied Friday. Key indexes rose 1.7% in Britain, 0.6% in Germany, 1.9% in France and 2.1% in Hong Kong. Markets were closed in Japan.
