Stocks bounce higher after losing ground last week
Wall Street followed last week’s pullback with a sharp advance Monday as bulls regained control.
But trading was thin, indicating that many players were staying on the sidelines.
Buoyed by some upbeat reports from the housing and financial sectors, the Dow Jones industrial average surged 235.44 points, or 2.8%, to 8,504.08, and broader indexes mostly scored bigger gains.
The Dow slumped 3.6% last week -- its biggest one-week loss since the latest rally began early in March -- after some weak economic data raised fears that the recession might not be ebbing as hoped.
But on Monday the market got a boost from a report showing that an index of U.S. home-builder confidence rose this month to an eight-month high.
KB Home rallied $1.27 to $16.83. Ryland Group gained $1.51 to $21.30.
Also, financial stocks rebounded after leading last week’s market sell-off. Goldman Sachs raised its rating on Bank of America to “buy” from “neutral,” saying the firm’s profit this quarter may significantly beat expectations.
BofA jumped $1.06, or nearly 10%, to $11.73, after plummeting 25% last week.
Wells Fargo advanced $2.06 to $26.93. Its biggest shareholder, Berkshire Hathaway, disclosed that it raised its stake in Wells by 12.6 million shares in the first quarter, to a total of 302.6 million. Berkshire is led by billionaire investor Warren E. Buffett.
The day’s rally extended well beyond builders and banks, however. Winners topped losers by more than 7 to 1 on the Big Board.
The Standard & Poor’s 500 index rose 26.83 points, or 3%, to 909.71, after slumping 5% last week. The Nasdaq composite gained 52.22 points, or 3.1%, to 1,732.36.
Although light trading disappointed some analysts, others said it was a positive sign that many investors still appeared to be holding back from hopping aboard the spring rally. The S&P; 500 is up 34.5% since March 9; the Nasdaq has risen 36.6%.
“The fact that we haven’t yet seen investors go all-in has made this rally more sustainable,” said Richard Sparks, an analyst at Schaeffer’s Investment Research in Cincinnati.
Among the day’s market highlights:
* India’s benchmark stock index soared 17% after the country’s ruling party scored a big victory in weekend elections, boosting hopes for the economy.
* In commodities trading, near-term crude oil futures rose $2.69 to $59.03 a barrel, the highest since November. Like the stock market, the oil market has been betting on a stronger economy in the second half of the year.
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