THE Standard & Poor’s 500 brushed up against a bear market yesterday, but investors rushed in to buy technology and other beaten-down sectors and the index posted its largest gain in more than a week.
The broad US market index has fallen nearly 18 per cent in the past four months, hurt by sluggish economic growth worldwide and ballooning deficits in Greece and other Eurozone nations.
But the depth of those losses brought in bargain hunters late in yesterday’s session. Chip makers and large-cap techs led the way, even with bellwether Apple dropping 0.6 per cent after the unveiling of its latest phone didn’t live up to the hype. Apple shares, earlier, fell more than five per cent.
“We’re buying some stocks, sticking to companies with strong balance sheets, with global if not emerging market focus, certainly not in the financial services area,” said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group.
The Dow Jones industrial average gained 153.41 points, or 1.44 per cent, to 10,808.71 at the close. The S&P 500 Index rose 24.72 points, or 2.25 per cent, to 1,123.95. The Nasdaq Composite Index climbed 68.99 points, or 2.95 per cent, to 2,404.82.
The market pared losses before midday after Federal Reserve Chairman Ben Bernanke told Congress the Fed was prepared to do more to help the fragile recovery.
Still, the Eurozone’s frail financial system is likely to keep the market on edge.
France and Belgium came to the rescue of heavy sovereign debt holder Dexia yesterday in the first government bailout of a European bank in the Eurozone debt crisis. Traders cited talk that European finance ministers agreed to prepare action to safeguard their banks as helping the market bounce back late.
The Dexia bailout came as euro zone finance ministers delayed a vital aid payment to debt-stricken Greece, which could run out of cash shortly.
Investors fear that a Greek default will force banks to write down billions of dollars from their books and kick-start another credit crisis.
Morgan Stanley shares gained 12.3 per cent to $14.01 but are still off 48.5 per cent this year. Shares of Bank of America rose 4.2 per cent to $5.76.
About 12.9bn shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq -- more than 60 per cent above the daily average so far this year of 8bn shares.