NEW YORK — It took some work, but investors managed to turn Wall Street’s best performance this year into a two-day advance.
Stocks ended with modest gains Wednesday, but the Dow Jones industrial average still recorded its first two-day climb since Feb. 5-6. The buying was far more subdued than Tuesday, when Citigroup’s upbeat assessment of its business sent investors rushing into the market, in part to cover bets that stocks would continue to slide. The Dow on Wednesday ended up nearly 4 points after jumping 379 the day before.
The session’s mood was more tentative than some investors might have hoped for, but given the market’s dismal performance for much of 2009, just holding on to gains from the rally was a victory.
Financial stocks that led the market’s huge rally Tuesday continued to pull ahead Wednesday. Tech stocks rose after an analyst raised Hewlett-Packard’s rating.
But analysts again cautioned that the market remains deeply troubled by the problems in the banking industry and the impact of the recession on companies in all industries. And they noted that there was little conviction behind Tuesday’s buying.
Investors nervous about the economy likely will need more good news to keep buying.
“People are looking past the sizzle and saying, ‘Where’s the steak?’ ” said Doug Roberts, chief investment strategist for .
Much of Tuesday’s buying came from short-covering, which occurs when investors need to buy stock to replace shares that were borrowed and then sold on expectations of a market decline.
The Dow rose 3.91, or 0.1 percent, to 6,930.40. The rise gives the blue chips their third advance in four sessions.
The S&P 500 rose 1.76, or 0.2 percent, to 721.36, while the Nasdaq composite index, which has a heavy representation of tech stocks, rose 13.36, or 1 percent, to 1,371.64.
For there to be a sustained advance, there has to be “many, many days of positive tone and the market interpreting data and news as more positive than negative,” said Roman Dubczak, head of equity capital markets at CIBC World Markets.
Many analysts are calling the market’s advance this week a bear-market rally. Bear-market rallies can last longer than a single day, said Mike Stanfield, chief executive of VSR Financial Services.
“If you go back a year and a half, every single rally has turned out to be a bear-market rally,” Stanfield said. “So I think you’d have to guess that this is another (one).”
