New York – Wall Street shot higher in a last-minute advance Wednesday after careening through a session made turbulent by ongoing concerns about U.S. home loans and the credit market.
Stocks zigzagged for much of the day, with the Dow Jones industrials moving from positive to negative territory and back up again before rallying to a gain of 150 points on bargain hunting during the last 20 minutes of trading. It was clear that any advance could be punctured by further bad news about soured subprime home loans, those made to borrowers with poor credit.
Wednesday’s trading further revealed the fractious nature of the stock market after a series of triple-digit swings in the Dow Jones industrials over the past week. On Tuesday, Wall Street gave back a big early gain and resumed the sharp slide it began last week, as concerns about home-loan defaults and their fallout re-emerged when American Home Mortgage Investment Corp. reported troubles with its credit lines.
Economic news – including a better-than-expected report on pending home sales – as well as record oil prices failed to pull investors’ concentration away from credit.
“We’ve got a tug of war going on,” said Arthur Hogan, chief market analyst at Jefferies & Co.
He said Wednesday’s trading represented a microcosm of the market’s performance in recent weeks, as investors alternately focused on concerns such as subprime loans and rising energy prices and positives such as low unemployment, low interest rates and still-growing corporate profits.
The Dow rose 150.38, or 1.14 percent, to 13,362.37. Broader stock indicators also advanced. The Standard & Poor’s 500 index rose 10.54, or 0.72 percent, to 1,465.81, and the Nasdaq composite index rose 7.60, or 0.30 percent, to 2,553.87.
Investors in recent sessions have succumbed to concerns about the credit markets that have dogged them for months. Stocks plunged at the end of last week amid such worries.
Hogan said the market’s sell-off since its July 19 high – when the Dow closed above 14,000 for the first time – has at times drawn out some bargain hunters, as occurred late Wednesday.
“We’ve got that dichotomy between fear and greed. This is greed kicking in,” he said. “You get to a point where are you more afraid of the fallout from credit spreads or are you more afraid of missing the market bottom?”
