NEW YORK — Investors shuttled between optimism and pessimism Wednesday, finally betting that the government might help the economy out of recession after all.
News in the late afternoon that key lawmakers agreed on a $789 billion economic stimulus plan sent stocks moderately higher in a partial rebound from a plunge Tuesday that took the Dow Jones industrials down nearly 382 points. The Dow finally settled up nearly 51 points.
Anthony Conroy, managing director and head trader for BNY ConvergEx Group, said investors are simply trying to keep ahead of events.
“I think everybody is trying to get through all this news,” he said. “Without healthy financials, it’s very hard to have a healthy economy. Everybody has to digest all the tidbits of information that are coming out.”
Stocks had plummeted Tuesday as investors showed their frustration with what they saw as a lack of details from Treasury Secretary Timothy Geithner about the latest version of the government’s bank bailout plan.
On Wednesday, the uncertainty continued. Investors snapped up heavily beaten- down bank stocks as chief executives of the nation’s top banks appeared before a House committee to answer questions about how they have put to use more than $160 billion in taxpayer money to date.
The Dow rose 50.65, or 0.64 percent, to 7,939.53. Broader stock indicators also rose. The Standard & Poor’s 500 index rose 6.58, or 0.80 percent, to 833.74, and the Nasdaq composite rose 5.77, or 0.38 percent, to 1,530.50.
Wednesday’s rise in the Dow is “not a strong statement here,” said Kim Caughey, equity research analyst at Fort Pitt Capital Group. “More information is what we need. What I mean by that is what exactly has been agreed to with the stimulus plan.”
And Wall Street remains nervous about how, exactly, Geithner’s financial rescue plan will work out.
Most Asian stock markets fell today, with Japan’s benchmark Nikkei average losing over 3 percent.
“The problem is the U.S. is such a big hole. People are afraid that even more trillions of dollars will not help much,” said Francis Lun of Fulbright Securities in Hong Kong.
