Stability returns to Wall Street
Wall Street displayed some welcome signs of stability today, pushing the Dow Jones industrial average up nearly 190 points in a relatively calm session despite some gloomy economic news.
The market that a week ago was reeling from fears about a recession took in its stride the US government’s report of a drop in gross domestic product during the third-quarter.
The GDP is the broadest measure of economic growth or contraction; the Commerce Department said GDP fell at an annual rate of 0.3% during the quarter. Analysts expected a 0.5% decline.
It is premature to say that the market’s volatility is over – most analysts expect the market to remain erratic for many months.
But today’s trading session was the calmest yet in weeks, a good sign that the market might be bottoming out, analysts say.
The Dow was only briefly in negative territory, and traded in a range of less than 300 points – well below the 400 and 500-point swings that have become commonplace.
Even though corporate earnings reports and outlooks have not been strong in recent weeks, there is a growing sense that business is not at a standstill.
Today, Exxon Mobil adhered to its five-year capital spending forecast, a day after Starbucks’ CEO Howard Schultz said it appears the coffee retailer’s store traffic may have already bottomed out.
“There’s the idea that life goes on, and will go on,” said Richard Cripps, chief market strategist for Stifel Nicolaus, noting that the daily trading range today for the Standard & Poor’s 500 index was about half its October average.
“The market sort of inhaled, and it was waiting to exhale – and you’re seeing that now,” he said.
According to preliminary calculations, the Dow rose 189.73, or 2.11%, to 9,180.69.
Broader stock indicators also finished higher. The S&P 500 index rose 24.00, or 2.58%, to 854.09, while the Nasdaq composite index rose 41.31, or 2.49%, to 1,698.52.
