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| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.633720 |
| Euro to US Dollar | 1.398406 |
| Japanese Yen to US Dollar | 0.010414 |
| Canadian Dollar to US Dollar | 0.861846 |
Stocks enjoyed their biggest one-day rally of the year as investors put aside worries about the economy and just plain bought.
The result was a 1.3%, 157-point gain for the Dow Jones industrials to 12,214 -- the largest jump for the blue chip stocks since July 24, 2006.
The Nasdaq Composite, meanwhile, climbed 44 points, 1.9%, to 2,385. The Standard & Poor's 500 Index rose nearly 21 points, 1.5%, to about 1,395. It was the Nasdaq's biggest gain since last Oct. 4, 2006, when it rose 47 points, and the largest point gain for the S&P since July 24.
The rally was a huge relief to investors, who had watched the market sag about 6% in less than two weeks. It came despite a comment from former Federal Reserve Chairman Alan Greenspan that the United States faces a 33% chance of a recession this year.
But market watchers cautioned that the lows of the sell-off will likely be tested again before a lasting rally kicks in.
Twenty-nine of the 30 stocks in the Dow were higher on the day, with only Johnson & Johnson (JNJ, news, msgs) showing a loss -- down just 13 cents to $61.70.
More than 470 stocks in the S&P 500 also were higher. Gainers led decliners on the New York Stock Exchange by a 5-1 ratio and by a 4-1 ratio on Nasdaq. Volume was big -- 1.8 billion shares on the NYSE and 2.16 billion on Nasdaq -- but not as big as in the past few days.
Citigroup (C, news, msgs), Altria (MO, news, msgs) and American Express (AXP, news, msgs) led the Dow with gains of 2.7%. General Motors (GM, news, msgs) was fourth with a 2.2% gain.
NVIDIA (NVDA, news, msgs) led the S&P 500 with a 5.9% gain to $30.46, followed by ADC Telecommunications (ADCT, news, msgs), up 5.4% to $16.10. Home lender Countrywide Financial (CFC, news, msgs) rose 4.4% to $36.74. The shares had been battered by worries about the financial health of its borrowers.
Steel company Allegheny Technologies (ATI, news, msgs) was up 5.2% to $99.34 as steel stocks generally rebounded from the sell-off. U.S. Steel (X, news, msgs) was up 3% to $87.67, and Nucor (NUE, news, msgs) was up 3.7% to $60.04.
Rallies in Asia and Europe set the tone for the day. The Nikkei 225 index ($N225), Japan's most-widely-watched index, was up 1.2%. Germany's Xetra DAX index ($DE:DAX) and the United Kingdom's FTSE 100 Index ($GB:UKX) both rose about 15.
Financials see a big rebound
A big reason for today's gains was a rally in financial stocks, which had been battered because of concerns they might be dragged into the subprime lender mess. Today, however, investors decided they were bargains and just plain snapped them up.It helped that Treasury Secretary Hank Paulson insisted in a Tokyo speech today that financial institutions are healthy and that the subprime problem won't threaten them.
The Amex Securities Broker/Dealer Index ($XBD.X) jumped 2.6% to 231. Key stocks popped up. Lehman Bros. (LEH, news, msgs) jumped 4.4% to $74.23. Merrill Lynch (MER, news, msgs) added 2.6% to $82.04, and Goldman Sachs (GS, news, msgs) added 3.9% to $197.37.
The basket cases of the subprime mortgage market -- NovaStar Financial (NFI, news, msgs) and New Century Financial (NEW, news, msgs) -- were up 5.8% and 10.1%, respectively, as investors saw bargains. A total of 32.8 million New Century shares changed hands today, fifth among stocks listed on the New York Stock Exchange.
Both have been clobbered this year because of rising levels of problem mortgages made to borrowers with little or troubled credit.
Meanwhile, interest rates were up slightly as demand for stocks took off. The yield on the 10-year Treasury note rose to 4.428% from 4.518% yesterday.
Energy prices rose today and helped oil and natural gas stocks move higher. Crude closed up 62 cents a barrel to $60.69 after briefing dipping under $60. ExxonMobil (XOM, news, msgs) closed at $71, up 1.5% on the day. Valero Energy (VLO, news, msgs) was up 3.45% to $57.84.
| Index | March 6 close | Date of intraday peak | Chg. since peak |
|---|---|---|---|
| Dow Jones industrials | 12,207.59 | 2/20/2007 | -4.97% |
| Standard & Poor's 500 | 1,395.41 | 2/22/2007 | -4.53% |
| Nasdaq Composite | 2,383.94 | 2/22/2007 | -5.83% |
| Dow Jones Utilities Index | 474.77 | 2/26/2007 | -5.83% |
| Dow Jones Transportation Index | 4,768.37 | 2/22/2007 | -8.81% |
| Standard & Poor's Midcap 400 Index | 822.16 | 2/26/2007 | -5.60% |
| Russell 2000 Index | 778.88 | 2/26/2007 | -6.16% |
| Philadelphia Semiconductor Index* | 465.52 | 2/26/2007 | -5.43% |
| Amex Oil Index | 1,129.19 | 12/14/2006 | -9.11% |
| S&P Retail Index | 503.74 | 2/20/2007 | -6.45% |
| MSCI U.S. REIT index | 1,114.53 | 2/7/2007 | -9.66% |
| Amex Securities/Broker Dealer index | 231.36 | 1/16/2007 | -10.75% |
* Semiconductor index peak since 2002 is 560.68 on Jan. 12, 2004 |
A real rebound or something else?
So does today's rally mean the pullback that erupted in the last few weeks is over? Possibly, and, if the pullback is done, it will be one of the shorter pullbacks in recent memory. A true correction normally lasts about 136 days -- a bit more than four months, according to Birinyi Associates, a Connecticut research firm.The rally today only repaired part of the damage of the selling waves that hit the market in the last week.
As of today's close, the Dow was still down nearly 5% from its intraday high on Feb. 20. The S&P 500 is still off 4.5%, and the Nasdaq is down 5.8%. The broker/dealers are still down more than 10%.
Much of today's rally involved short-covering. That's buying by sellers who had sold stocks short expecting the market to move lower.
At the same time, however, the economic worries haven't gone away. Factory orders for January, in fact, had the biggest decline in six years, and productivity growth in the fourth quarter was much less than expected while labor costs jumped. That added a little fire to the interest rate increase.
Today's rally stalled a bit after the National Association of Realtors said its index of pending home sales in February fell 4% from January. The trade group insisted much of the decline was weather related.
But the breadth of the rally has bulls sounding chipper.
"You've got the full force of Wall Street saying 'buy the dip,' " James Thorne, a market strategist at MTB Investment Advisors, told Bloomberg. "If you quell your emotions and know that everything's going to be OK in the longer-term view, you can use these corrections to your benefit."
Still at least one strategist sees the possibility of more declines.
"We continue to believe it is too soon to commit new funds to the market, until earnings expectations drop further to reflect the likelihood of additional slowing and until stocks' valuation metrics improve to provide investors with a better risk/reward tradeoff," Tom McManus, a market strategist at Bank of America, wrote in a note to clients.
Michael Birch, a money manager at Wallace Funds Management in Sydney, Australia, told Bloomberg: "Nothing has actually changed for shares fundamentally, and you're going to get more investors buying stocks once they're confident that the slump was a temporary event."
| Tues. | Mon. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $60.69 | $60.07 | $0.62 | -1.78% | -0.59% |
| Heating oil (per gallon) | $1.7473 | $1.7248 | $0.0225 | -1.86% | 9.35% |
| Natural gas (per million BTU) | $7.4720 | $7.2540 | $0.2180 | 2.36% | 18.62% |
| Unleaded gasoline (per gallon) | $1.8533 | $1.8447 | $0.0086 | 0.31% | 15.68% |
A 33.3% chance of a recession?
Former Federal Reserve Chairman Alan Greenspan -- whose cautionary words helped trigger last week's stock slaughter -- has told Bloomberg that he thinks there is a one-third chance of a recession in 2007."We are in the sixth year of a recovery; imbalances can emerge as a result," said Greenspan, who turned 81 today.
Greenspan also said he "was surprised at this recent episode," talking about the markets' reaction to his still-powerful words.
- Video: Greenspan speaks . . . again
Some observers think Greenspan should just button it. His "history of predicting things has been no better than anyone else's, and actually much worse," Mike Holland of money-management firm Holland & Co. told CNBC this morning.
More from MSN Money
Cerberus Capital is in Detroit
Private-equity firm Cerberus Capital Management is reportedly meeting with executives at Chrysler Group to discuss a possible bid for the troubled U.S. arm of DaimlerChrysler (DCX, news, msgs).The Detroit News reported that Cerberus is the first private-equity firm to make the trip to Auburn Hills, Mich., to look over Chrysler's finances and operations. Blackstone Group is scheduled to meet with management later this week, the newspaper reported.
Shares of DaimlerChrysler rose nearly 4.3% to $68.61 on the day.
DaimlerChrysler CEO Dieter Zetsche said Feb. 14 that the company was exploring all options for its Chrysler unit, including a possible sale.
- Video: DaimlerChrysler's CEO talks
Separately, Zetsche said that the move to potentially sell Chrysler was not because of shareholder pressure but was instead a "proactive development," The Wall Street Journal reported today.
Zetsche added that whatever decision is made, it would be a joint decision with Chrysler CEO Tom LaSorda and would be what was best for Chrysler.
Citigroup to acquire a bigger stake in Nikko Cordial
Citigroup shares were helped by confirmation of a $10.75 billion deal to buy Japanese brokerage Nikko Cordial in what would be the biggest acquisition of a Japanese brokerage by a foreign company.The deal would increase Citigroup's stake in Nikko from 4.9% to more than 50%, a move to secure its position in the world's second-biggest economy. Nikko has been working to restructure after an accounting scandal plagued its merchant-banking arm.
| Tues. | Mon. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 4.975% | 4.960% | 0.015 | -99.00% | 1.84% |
| 5-year Treasury note yield | 4.478% | 4.459% | 0.019 | -0.56% | -4.74% |
| 10-year Treasury note yield | 4.528% | 4.518% | 0.010 | -0.48% | -3.86% |
| 30-year Treasury bond yield | 4.655% | 4.654% | 0.001 | -0.30% | -3.38% |
| Currencies | |||||
| U.S. Dollar Index | 84.01 | 84.11 | -0.10 | 0.61% | 0.70% |
| British pound in dollars | $1.934 | $1.932 | 0.002 | -1.53% | -1.32% |
| Dollar in British pounds | £0.517 | £0.518 | -0.001 | 1.55% | 1.33% |
| Euro in dollars | 1.313 | 1.314 | 0.000 | -0.76% | -0.50% |
| Dollar in euros | € 0.7614 | € 0.7613 | 0.000 | 0.77% | 0.50% |
| Dollar in yen | ¥116.74 | ¥116.57 | 0.17 | -1.53% | -1.92% |
| Commodities | |||||
| Gold | $646.20 | $639.20 | $7.00 | -3.91% | 1.29% |
| Copper | $2.7135 | $2.6705 | $0.04 | -1.40% | -5.49% |
| Silver | $12.9850 | $12.7500 | $0.23 | -8.78% | 0.39% |
| Crude oil (NYMEX) (per barrel) | $60.69 | $60.07 | $0.62 | -1.78% | -0.59% |
Bausch & Lomb recalls contact-lens solution
Eye-care company Bausch & Lomb (BOL, news, msgs) said it is recalling 1.5 million bottles of ReNu MultiPlus contact lens solution because the solution contains trace amounts of iron, which can shorten its shelf life. The recalled bottles have the expiration date "2008-03."The company's recall last year of its ReNu with MoistureLoc will contribute to a 3% drop in revenue for 2006, the company said, stating preliminary results. Bausch & Lomb also said fourth-quarter sales would fall 5% to $598.5 million. Analysts were expecting revenue for the quarter to come in at $619.7 million.
The company said the latest recall should not significantly affect its financial results. Investors were delighted; the stock moved up 2.6% to $51.72.
By Charley Blaine and Elizabeth Strott
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