That was some rally this morning, some sell-off this afternoon -- and some recovery at the close.
Stocks finished modestly higher in a very volatile session where good news about factory orders and new-home sales was slammed by disappointing debt auctions in the United States and Britain and reports of new layoffs at IBM (IBM, news, msgs).
But bulls were able to get the market moving higher at the close.
The Dow Jones industrials finished up 90 points, or 1.2%, to 7,750. The blue chips had been up as much as 200 points at 10:45 a.m. ET and down 110 points at 3 p.m.
The Nasdaq Composite Index was up 12 points, or 0.8%, to 1,529, and the Standard & Poor's 500 Index managed an 8-point gain, 1%, to 814.
Durable goods orders rose an unexpected 3.4% in February, the biggest gain in more than a year, the Commerce Department reported this morning. New-home sales rose a surprising 4.7% in February, much better than economists expected.
But the good news was trumped -- for a while -- by some bad news:
- Yields on Treasury securities moved higher after an auction of 5-year notes produced higher-than-expected yields. The fear among traders was that record sales of U.S. debt were overwhelming demand, Bloomberg News said. The yield on the 5-year note rose to 1.812% this afternoon from 1.693% on Tuesday. The rise in Treasury yields was exacerbated by the failure of a British auction of 40-year bonds to draw enough bids to cover the size of the offering, something that hasn't happened in more than a decade.
- The Wall Street Journal reported that IBM was expected to chop up to 5,000 U.S.-based jobs in its global-services business and move many of them to India. IBM had been up as much as 1.6% and down as much as 2.3% before recovering to end at $97.95, down 0.4%. IBM has already cut about 4,000 jobs this year.
- Crude oil fell $1.17 to $52.81 a barrel in New York this afternoon, pulling energy shares lower. The Energy Information Administration this morning said crude inventories rose by 3.3 million barrels last week. Energy shares were mostly lower. Apache (APA, news, msgs) was down 1% to $67.60. Schlumberger (SLB, news, msgs), which had been down as much as 5%, finished with a 1.8% loss to $45.34.
What turned the market around a second time was a recovery in financial stocks, which had been knocked down by the problems in the Treasury market.
The Select Sector SPDR-Financial (XLF, news, msgs) exchange-traded fund, which tracks the financial stocks in the S&P 500, closed up 3.3% to $9.32. JPMorgan Chase (JPM, news, msgs), up 8.2% to $28.56, and Bank of America (BAC, news, msgs), up 6.7% to $7.70, were the leaders among the 30 Dow stocks.
No financial stock typified the wild day more than Wells Fargo (WFC, news, msgs), whose debt rating, along with Bank of America's, had been cut by Moody's today. The stock was up 10.9% early in the day, tumbled to a 4.1% loss by 3 p.m. and closed up 5.9% to $16.42.
Twenty Dow stocks were higher on the day, along with 322 S&P 500 stocks. The laggards were Citigroup (C, news, msgs), down 2% to $2.95, and General Motors (GM, news, msgs), down 6.6% to $2.99.
Meanwhile, 64 stocks in the Nasdaq-100 Index ($NDX.X) were higher; the index was up 2 points, or 0.2%, to 1,237.
The index was held back by weakness in such key stocks as Research In Motion (RIMM, news, msgs), down 3% to $42.92; Google (GOOG, news, msgs), down 0.9% to $344.07; and Dell (DELL, news, msgs), down 2.3% to $10.17.
S&P headed to best monthly gain since 1991
If the first quarter ended today, the S&P 500 would finish with a 10.7% gain, its best monthly performance since December 1991, when the index jumped 11.2%. Financial stocks are powering the surge.The Dow is looking at a 9.7% gain, its biggest since April 1999, and the Nasdaq, up 11% with today's close, is looking at its best month since October 2002, when it jumped 13.5%.
Futures trading suggests U.S. markets will open higher on Thursday.
But one foreign issue may upset matters. News reports suggest that North Korea has loaded a long-range missile on a launch pad. It may launch the missile next month. That may affect Japanese stocks.
Earnings are expected Thursday from appliance and electronic retailer Best Buy (BBY, news, msgs) and ConAgra Foods (CAG, news, msgs).
The weekly report on jobless claims is due, along with a last look at fourth-quarter Gross Domestic Product.
Bidders line up for Volvo; more aid to GM, Chrysler ahead
Ford Motor (F, news, msgs) shares fell 3.2% to $2.77 on news that it may get $1 billion to $2 billion for its Volvo Cars unit. That's less than a third of what it paid 10 years ago, as it conducts sale talks with more than three bidders, Bloomberg News said today.Shedding the Swedish automaker, the last piece of Ford’s failed strategy to boost profit with European luxury brands, may take six months to complete, a source told Bloomberg. The person wouldn’t name the potential buyers.
Battered by a record $14.7 billion loss last year, Ford is trying to raise cash and buttress its balance sheet to remain the only major U.S. automaker not receiving federal aid. General Motors and Chrysler Group are operating on $17.4 billion in low-cost U.S. loans.
Separately, President Barack Obama’s auto task force will announce more aid for U.S. automakers within a week and possibly in a few days, Sen. Carl Levin, D-Mich., said.
GM and Chrysler are seeking as much as $21.6 billion in additional help after receiving $17.4 billion in federal loans since December. Steven Rattner, the U.S. Treasury’s chief auto adviser, said March 20 the task force would give a “sense of direction” before the end of the month.
Biggest jump in orders since 2005
Excluding transportation equipment, durable goods orders rose 3.9% -- the biggest jump since August 2005. Orders for capital goods rose 11%, machinery orders rose 13.5%, and transportation orders rose 2% last month."Except for the aircraft industry, all key subsets of the capital goods industry registered better orders in February," Nomura chief economist David Resler wrote clients this morning.
Today's uptick may mean that inventories and supply in the pipeline are too lean to meet current demand, he added.
Resler was skeptical the report was a signal of a sharp reversal, but he said, "It may indicate that demand is beginning to stabilize."
Durable goods orders for January were revised downward to negative 7.3% from a previous reading of negative 4.5%. The drop in January marked a losing streak of six consecutive months, the longest since the report was first published in 1992.
| Wed. | Tues. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $52.77 | $53.98 | -$1.21 | 17.90% | 18.32% |
| Heating oil (per gallon) | $1.4647 | $1.4996 | -$0.0349 | 15.70% | 4.20% |
| Natural gas (per million BTU) | $4.3290 | $4.3470 | -$0.0180 | 3.12% | -23.00% |
| Unleaded gasoline (per gallon) | $1.4950 | $1.5026 | -$0.0076 | 16.73% | 48.28% |
New-home sales increase
New-home sales rose to a seasonally adjusted annual rate of 337,000 in February, the Commerce Department reported this morning, up from a revised level of 322,000 in January.Economists had expected sales to drop to an annualized rate of 300,000 last month. (The annualized rate is the number of homes that would be sold this year if the rate of sale were to remain the same.)
January sales were revised higher from a previous reading of 309,000. January's level is still the record low since data were first collected in 1963. February's level is the second-worst on record.
The median price of a new home fell 18.1% to $200,900 from a year ago, the lowest price since December 2003. Inventories of unsold homes fell 2.9% to 330,000 in February, representing a 12.2-month supply at the current sales pace, higher than the 9.2-month supply seen in February 2008.
New-home sales are still down 41.1% from February 2008.
On Monday, a report on existing-home sales showed a 5.1% jump in February from January to a seasonally adjusted annual rate of 4.72 million units. It was the biggest monthly percentage gain since July 2003.
Some analysts believe the housing sector is still struggling, however. "Existing home sales popped in February, but they did so at the expense of pricing. Simply put, more homes turned over, but only because sellers were more aggressive on price in many of the U.S.'s hard-hit markets," wrote Mike Larsen, real-estate analyst with Weiss Research, in a note. "The new-home market, for its part, has been suffering because builders are having a difficult time competing against aggressively priced existing homes."
Mortgage applications rise
The number of mortgage applications jumped a seasonally adjusted 32.2% last week from the previous week, the Mortgage Bankers Association said in a report this morning, with applications up 18% from the same week a year ago.The Federal Reserve's recent moves to help the housing market sent the rate on a 30-year fixed mortgage down to an average 4.63% last week -- a record low -- from 4.89% the week before.
Refinancing applications made up nearly 79% of all of last week's applications, the MBA said. The number of refinancing applications jumped 41.5% from the week before.
Fed starts buying Treasurys
The Federal Reserve bought $7.5 billion in U.S. Treasury securities today in the central bank's first outright purchase of government securities since the 1960s. The purchase was part of a plan to buy up to $300 billion in Treasurys, one leg in the Fed's program to inject up to $1.15 trillion in cash into the staggering economy.The other legs are purchases of up to $750 billion on mortgage-backed securities from Fannie Mae (FNM, news, msgs) and Freddie Mac (FRE, news, msgs) and $100 billion on Fannie and Freddie debt.
The move is a classic example of "quantitative easing," an attempt by a central bank to expand the supply of money and credit.
Andrew Rosenbaum contributed to this report.
| Wed. | Tues. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 0.185% | 0.205% | -0.020 | -26.00% | 60.87% |
| 5-year Treasury note yield | 1.805% | 1.693% | 0.112 | -10.64% | 16.38% |
| 10-year Treasury note yield | 2.772% | 2.654% | 0.118 | -8.85% | 23.53% |
| 30-year Treasury bond yield | 3.717% | 3.606% | 0.111 | -0.13% | 38.13% |
| Currencies | |||||
| U.S. Dollar Index | 84.295 | 84.330 | -0.035 | -4.37% | 2.61% |
| British pound in dollars | $1.4562 | $1.4704 | -0.0141 | 1.67% | -1.16% |
| Dollar in British pounds | £0.6867 | £0.6801 | 0.0066 | -1.65% | 1.18% |
| Euro in dollars | $1.3589 | $1.3477 | 0.0112 | 7.16% | -3.00% |
| Dollar in euros | € 0.7359 | € 0.7420 | -0.0061 | -6.68% | 3.10% |
| Dollar in yen | 97.50 | 97.83 | -0.33 | -0.11% | 7.56% |
| Canadian dollar in U.S. dollars | $0.812 | $0.813 | -$0.0007 | 3.44% | -0.66% |
| U.S. dollar in Canadian dollars | $1.232 | $1.230 | $0.0019 | -3.33% | 0.67% |
| Commodities | |||||
| Gold | $938.00 | $926.00 | $12.00 | -0.48% | 6.07% |
| Copper | $1.8030 | $1.8060 | $0.00 | 17.19% | 27.87% |
| Silver | $13.4370 | $13.3570 | $0.08 | 2.49% | 18.26% |
| Corn | $3.8575 | $3.9375 | -$0.08 | 9.98% | -5.22% |
| Crude oil (NYMEX) (per barrel) | $52.77 | $53.98 | -$1.21 | 17.90% | 18.32% |