NEW YORK — Investors gave the stock market a big last-hour turnaround Thursday on the anticipation of Goldman Sachs settling the government’s civil fraud charges.
As word spread that the Securities and Exchange Commission had scheduled a late-afternoon announcement, investors began buying on the belief that Washington and Goldman Sachs Group Inc. had settled the charges that grew out of the sale of securities based on risky mortgages.
The $550 million settlement was announced less than an hour after trading ended. Goldman agreed to pay fines of $300 million — the largest fine against a financial company in SEC history — and $250 million to compensate investors who lost money on the securities. The deal also requires Goldman to review how it sells complex financial mortgage investments.
The settlement lifts uncertainty that has hovered around Goldman since the charges were announced April 16. Expectations of a deal were enough to make traders temporarily set aside concerns about the economy. A series of disappointing economic reports had sent the Dow Jones industrial average down nearly 100 points in late trading. The Dow scrambled back to a loss of 7 by the closing bell.
Broader indexes were narrowly mixed.
Goldman was trading at about $140 a share when word of the pending announcement came. The stock then soared to close at $145.22 and shot up to $153.45 in after-hours trading.
Investors viewed Goldman’s settlement as a buying opportunity for a stock that has been hammered since the SEC filed charges.
A little more uncertainty was lifted from the market late in the day, when the Senate passed and sent to President Barack Obama the financial overhaul bill.
But because regulations implementing the bill’s provisions have yet to be written, traders were still wary.
The Dow fell 7.41, or 0.07 percent, to 10,359.31. The Standard & Poor’s 500 index rose 1.31, or 0.1 percent, to 1,096.48, while the Nasdaq composite index fell 0.76, or 0.03 percent, to 2,249.08.
Bond prices rose as investors who were worried about the economy sought the safety of government securities.
