Bargain hunters help lift Wall St

WALL Street rebounded after three days of declines yesterday, but the advance could be temporary as concerns about Japan’s nuclear crisis persisted.

The S&P 500 recovered after giving up the year’s gains on Wednesday, but options activity showed traders are increasing hedges against another decline in stocks.

“As the headlines come out of Japan, there are more nervous traders liquidating their long positions in futures put on this morning,” said Steve Leuer, stock-index futures trader at X-FA Trading firm in Chicago.

The recent losses brought out investors looking for bargains. However, volume was lackluster, with just 7.95 billion shares changing hands on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year’s daily average of 8.47 billion and down sharply from Wednesday’s record for the year of 11.1 billion shares traded.

If the market is to refocus on fundamentals, more news from bellwethers like FedEx will help. The world’s largest cargo airline forecast improved revenue on strong demand, lifting shares 3.1 percent to $87.89.

The Dow Jones Transport average gained 1.4 per cent.

At the close, a total of about 1.23 million option contracts changed hands in the S&P 500 as puts outpaced calls by a factor of 2.17:1, according to options analytics firm Trade Alert. The recent average put-to-call ratio is 1.93.

An index put option conveys the right to sell an index at a certain level.

The Dow Jones industrial average was up 161.21 points, or 1.39 per cent, at 11,774.51.

The Standard & Poor’s 500 Index was up 16.81 points, or 1.34 per cent, at 1,273.69. The Nasdaq Composite Index was up 19.23 points, or 0.73 per cent, at 2,636.05.

But the S&P 500 is down 2.3 per cent for the week so far.

Stocks’ recent declines followed a rally of nearly six months. The rally in itself has prompted predictions of a market correction.

From a chart standpoint “I don’t see anything right now that suggests that the near-term decline is over,” said Chris Burba, short-term market technician at Standard & Poor’s in New York.

The CBOE Volatility Index VIX, Wall Street’s fear gauge, fell 10.3 per cent to 26.37 as stocks rose, but the VIX was still high compared with the recent average of about 20.

The market could see greater volatility today as the two-day quadruple witching period ends.