I think I can hear the grasshoppers again in the woods…at least until another volatile day tomorrow 🙂
NEW YORK (AP) — Wall Street finished a back-and-forth session sharply higher Wednesday as investors sought bargains while also contending with concerns about the strength of the economy and upcoming corporate results.
The Nasdaq composite index showed its first gain in nine sessions and the Dow Jones industrial average gained more 200 points in the final 90 minutes of the session to finish nearly 150 points higher.
The gains at the end of a fractious session came ahead of a fourth-quarter report from Alcoa Inc., which marked the unofficial start of earnings season.
Wednesday's session was as choppy as Tuesday's, when stocks tumbled amid concerns about the economy. Unease about the economy has caused intense market volatility since the start of the year, with stocks rising on hopes for more interest rate cuts, and plunging as investors doubt that will be enough. The market is also worried about how fallout from the mortgage and credit crisis has affected corporate earnings.
A prediction of a recession in 2008 by Wall Street's biggest investment bank at times appeared to weigh on investors. Goldman Sachs said it expects fallout from the housing slump and recent tightness in the credit markets will spread to the broader economy this year.
Countrywide Financial Corp. may have added to the seesaw trading, saying Wednesday that the delinquency and foreclosure rate of home loans in its portfolio surged in December. The stock in the nation's largest mortgage lender had fallen sharply Tuesday amid bankruptcy rumors that the company said were baseless. Countrywide fell 35 cents, or 6.4 percent, to $5.12.
Wednesday brought little in the way of economic news and investors instead awaited a speech by Federal Reserve Chairman Ben Bernanke set for Thursday that could give clues about the central bank's stance on the weakening economy.
The up-and-down days on Wall Street are likely to continue as investors grapple with their concerns about the economy, according to Thomas Nyheim, vice president and portfolio manager at Christiana Bank & Trust Co.
"Things are definitely slowing. The problem is, the more and more economists and strategists come out and say things are slowing, you could get a real downturn," he said. He said the market's pullback, however, has left stock prices at more appropriate levels.
According to preliminary calculations, the Dow rose 146.24, or 1.16 percent, to 12,735.31.
Broader stock indicators also rebounded. The Standard & Poor's 500 index rose 18.94, or 1.36 percent, to 1,409.13, and the Nasdaq composite index, which had been down more than 1 percent during the session, finished up 34.04, or 1.39 percent, at 2,474.55.
Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume came to 2.06 billion shares compared with 1.84 billion shares traded Tuesday.
The rebound Wednesday wasn't large enough to pull the Dow from the realm of a correction, which is a 10 percent drop from a recent high. The blue chip index is still off 10.1 percent from its Oct. 9 high. The S&P 500 is now down 9.97 percent from its high.
Bond prices rose Wednesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.82 percent from 3.84 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude fell 72 cents to $95.61 a barrel on the New York Mercantile Exchange after a government report showed domestic inventories declined last week.
Alcoa reported after the closing bell that its fourth-quarter profit rose to $632 million, or 75 cents per share, from $359 million, or 41 cents a share, a year earlier. Wall Street had been hoping the results would help indicate how well the economy was holding up. Alcoa, one of the 30 stocks that comprise the Dow industrials, finished up 25 cents to $31.25 and rose to $31.94 in after-hours trading.
Troubled discount brokerage E-Trade Financial Corp., which Tuesday saw shares dip to an all-time low on growing mortgage segment losses, said it sold about $3 billion of mortgage-backed securities and municipal bonds on top of the November sale of its $3 billion asset-backed portfolio. E-Trade rose 15 cents, or 6.7 percent, to $2.40.
Chemical maker DuPont Co. rose $2.03, or 4.8 percent, to $44.78 after raising its fiscal 2007 profit forecast, citing better-than-expected fourth-quarter sales. The company, which makes a wide range of products including automotive coatings and genetically modified seeds, also lifted its forecast for 2008.
James Cayne stepped down as chief executive of Bear Stearns Cos. He was replaced by Bear Stearns President Alan Schwartz, a 57-year-old investment banker respected for his dealmaking savvy. Bear Stearns rose $3.65, or 5.1 percent, to $74.82.
The Russell 2000 index of smaller companies rose 7.26, or 1.03 percent, to 712.12.
Overseas, Japan's Nikkei stock average closed up 0.49 percent. Britain's FTSE 100 fell 1.32 percent, Germany's DAX index dropped 0.86 percent, and France's CAC-40 fell 1.10 percent.
Alcoa profit surges after sale of business units
SAN FRANCISCO (MarketWatch) — Alcoa Inc., the first of the Dow industrials to report this earnings season, posted Wednesday a 76% surge in fourth-quarter profit, benefiting from the aluminum giant's move to sell off its packaging and consumer businesses in December.
The New York-based companyAA31.25, +0.25, +0.8%) reported a profit of $632 million, or 75 cents a share, up from $359 million or 41 cents a share a year ago.
Total revenue fell to $7.39 billion from $7.84 billion due to lower aluminum prices and the exclusion of its soft alloy extrusion segment that is now part of a joint venture.
Excluding a favorable restructuring adjustment and a tax benefit stemming from the business sales, earnings would have come in at 36 cents a share.
Analysts polled by Thomson Financial had expected a profit, on average, of 33 cents a share on revenue of $6.92 billion.
"We battled substantially higher material-input and energy costs and currency impacts, while simultaneously continuing to execute on the largest capital-investment program in our history," Chairman and Chief Executive Alain Belda said in a statement.
Alcoa's year-over-year improvement comes at a time when average aluminum prices have fallen 4% from the previous quarter and 8% from a year earlier in the face of declining demand for U.S. construction. See full story.
"Certainly, the weakness in North America has been well-documented, and we estimate that 2007 consumption decreased by almost 10% driven by weakness in the transportation and distribution markets," Alcoa CFO Charles McLane said in a conference call.
Last month, Alcoa agreed to sell the Closure Systems International, Consumer Products, Flexible Packaging and Reynolds Food Packaging units to New Zealand-based Rank Group Ltd. for $2.7 billion.
Ahead of the results, Alcoa shares edged up almost 1% to close at $31.25.
There were rumors late in the day of a “surprise” rate cut from the Fed coming imminently. It’s so completely idiotic that it must be true. That’ll get the market all lathered up until it realizes that it won’t help.
There were rumors late in the day of a “surprise” rate cut from the Fed coming imminently. It’s so completely idiotic that it must be true. That’ll get the market all lathered up until it realizes that it won’t help.
There were rumors late in the day of a “surprise” rate cut from the Fed coming imminently. It’s so completely idiotic that it must be true. That’ll get the market all lathered up until it realizes that it won’t help.
There were rumors late in the day of a “surprise” rate cut from the Fed coming imminently. It’s so completely idiotic that it must be true. That’ll get the market all lathered up until it realizes that it won’t help.
There were rumors late in the day of a “surprise” rate cut from the Fed coming imminently. It’s so completely idiotic that it must be true. That’ll get the market all lathered up until it realizes that it won’t help.
