NEW YORK — Wall Street capped a week of remarkable volatility with a big advance Thursday that left stocks higher for the week but didn’t silence all of investors’ concerns about the economy and the financial system.
Bargain-hunting and a milder-than-expected drop in a regional manufacturing report helped leaven stocks Thursday. The Dow Jones industrial average rose about 260 points on the day, giving the blue chips a gain of more than 3 percent for the week. Broader indexes finished the week with gains of 2 percent to 3 percent.
A week that opened with fearful questions over the soundness of the financial system following the near-collapse of Bear Stearns Cos. is ending on a more upbeat note, thanks in part to the Federal Reserve’s efforts to inject liquidity and calm into the markets.
The central bank not only again deployed its primary tool for stimulating economic activity — an interest-rate cut — but also took several steps aimed at oiling the troubled credit markets, making it easier for banks to breathe. Policymakers said they would loan directly to investment banks and accept as collateral much of the now- shunned debt that is backed by mortgages. A spike in defaults on home loans has made many financial players hesitant to extend credit.
Economic readings Thursday exemplified the mixed signals investors are receiving. The Labor Department said the number of newly laid-off workers filing for unemployment benefits rose last week by a more-than-anticipated 22,000 to 378,000. That level is the highest in nearly two months. Meanwhile, the Conference Board said its index of leading economic indicators fell, as expected, for the fifth straight month in February.
Crude oil fell, while gold prices declined sharply.
Still, the markets are apt to stay volatile for some time, as investors digest news on the economy.
“It’s the every-other-day theory — up one day and down the next,” said Scott Brown, chief economist at Raymond James & Associates.
The Dow on Thursday rose 261.66, or 2.16 percent, to 12,361.32.
Broader stock indicators also advanced. The Standard & Poor’s 500 index rose 31.09, or 2.39 percent, to 1,329.51, and the Nasdaq composite index rose 48.15, or 2.18 percent, to 2,258.11.
Though the week was a shortened one for Wall Street, the volatility packed into four days made it feel much longer.
Thursday’s gains came a day after a steep drop that eroded most of a 420-point gain in the Dow on Tuesday — the biggest in more than five years — following the Fed’s decision to lower its benchmark interest rate by 0.75 percentage points to 2.25 percent.
Todd Salamone, director of trading for Schaeffer’s Investment Research in Cincinnati, said investors appeared somewhat optimistic.
“There’s some belief out there that the worst is behind us, but that’s not necessarily written in stone,” he said. “You’re getting a strong bid in financials and housing stocks — sectors that have been the cause for the jitters.”
Shares in energy and metals companies were mixed Thursday.
Markets closed
U.S. stock markets are closed today in observance of Good Friday. Trading resumes Monday.
