NEW YORK — A volatile Wall Street advanced Thursday for the second straight day, as investors found renewed confidence in a report that Bank of America is close to buying struggling mortgage lender Countrywide Financial.
After seesawing earlier in the day, the Dow Jones industrials finished up nearly 120 points on the afternoon report from The Wall Street Journal. The stock market has been buffeted by concerns about fallout from the mortgage and credit crisis. Countrywide’s problems with delinquent and defaulting loans have sent stocks falling even in recent days.
“For the last month, rumors are that Countrywide was going into bankruptcy,” said Ryan Larson, senior trader at Voyageur Asset Management. “Any deal with Bank of America is good news, and the market is looking for even a hint of good news these days.”
Credit concerns were one reason the market waffled in earlier trading, with investors trying to reconcile comments on the economy from Federal Reserve Chairman Ben Bernanke and Kansas City Fed president Thomas Hoenig.
Stocks jumped after Bernanke said the Fed was ready to lower interest rates again.
But they bobbled up and down before turning narrowly mixed after Hoenig said later that inflation remains a concern and the stock market is “not the center of our attention.” The comments kept alive fears that the Fed may not respond to investor concerns even as it monitors the weakening economy.
Jim Herrick, manager of equity trading at Baird & Co., said many investors have been betting for some time that the Fed will lower rates by a half-point at their next meeting, so Bernanke’s comments are hardly surprising.
“There’s still subprime issues. We still have concerns about earnings and the mortgage market,” said Herrick.
Furthermore, Wall Street is worried that it will take a lot more than rate cuts to restore economic momentum.
The Dow Jones industrial average rose 117.78, or 0.92 percent, to 12,853.09.
Broader stock indicators also rebounded. The Standard & Poor’s 500 index rose 11.20, or 0.79 percent, to 1,420.33, while the technology-heavy Nasdaq composite index rose 13.97, or 0.56 percent, to 2,488.52.
