The on-again, off-again relationship that investors have had with stocks this week shifted into on-again mode on Thursday, when major indexes posted strong gains after Wednesday’s rout.
The Dow Jones industrial average closed at 11,143.31, up 423.37 points or 4 per cent. The Dow had been higher heading into the close of trading, but surrendered about 140 points in the final 15 minutes. The broader S&P 500 closed at 1172.64, up 51.88 points or 4.6 per cent. In Canada, the S&P/TSX composite index closed at 12,539.80, up 340.91 points or 2.8 per cent.
The gains served to highlight how volatile trading has been this week. The Dow fell 5.6 per cent on Monday, rose 4 per cent on Tuesday and fell 4.6 per cent on Wednesday. With Thursday’s gain, the blue-chip index is now down 2.6 per cent for the week overall.
The day began with some good news: The U.S. Labor Department reported that initial jobless claims fell by 7,000 for the period ended last week, to 395,000. That’s the lowest number of claims since early April, and seems to have triggered some optimism that fears of economic weakening are overblown.
At the same time, there were some good earnings – particularly from Cisco Systems Inc. The tech giant surged 16 per cent after it reported that it is making progress in controlling costs and its chief executive said that it is making “solid progress” in turning the troubled company around.
In Europe, stocks also rose after reports that market authorities there are considering a ban on short-selling – or the act of betting against the market by borrowing stocks, selling them, and then hoping to buy them back at lower prices later. Short-selling bans were all the rage during the 2008 and 2009 bear market, but observers feel they had little long-term impact. The U.K.’s FTSE 100 rose 3.1 per cent and Germany’s DAX index rose 3.3 per cent.
In France, where bank stocks have been battered over their exposure to risky sovereign bonds and the potential fallout should France lose its triple-A credit rating, stocks rose on Thursday after Bank of France Governor Christian Noyer assured investors that the country’s banks were financially solid.
Meanwhile, investors retreated from typical havens during their rush into stocks. Gold fell to $1,751.50 (U.S.) an ounce, down $32.80. The yield on the 10-year U.S. Treasury bond surged as prices slumped, just a day after yields hit their lowest level since the financial crisis.Report Typo/Error