Stocks surge, lifting Dow back over 10,000 after weeks of heavy selling
Increase in buying doesn’t indicate more optimistic investors, experts warn
NEW YORK — The Dow Jones industrial average climbed back above 10,000 on Wednesday after investors had second thoughts about the heavy selling going on in the stock market during the past two weeks.
The Dow rose 275 points as stocks soared, the market’s first back-to-back advance since mid-June and the first close above the psychological benchmark of 10,000 since June 28. But analysts warn that the buying doesn’t mean that investors are more optimistic. They said that there wasn’t a single catalyst behind the move and that it looked like a case of investors scooping up stocks that had become cheaper after heavy losses. The Dow had fallen 7.3 percent over two weeks.
“It’s just more of a reaction to a little bit too much negativity,” said Marc Harris, co-head of global research for RBC Capital Markets in New York.
The Dow and broader indexes gained more than 2 percent. Trading volume was light, however, signaling that many skeptical investors were staying out of the market. Interest rates rose as some investors dumped Treasurys in favor of riskier assets like stocks.
Wednesday’s gains fit a pattern of volatility that began in late April, when the Dow began tumbling from its 2010 high of 11,205.03. The Dow had fallen 13 percent since then, and the long slide included many triple-digit
The protracted drop began on concerns that debt problems in Greece and other European countries would stifle the continent’s recovery and eventually the recovery in the U.S. But in the past few weeks, stocks have been tumbling on signs that the domestic rebound is slowing. Some traders were selling on fears that the country is headed back into recession. They were also buying Treasurys so they could put their money into a safe place.
Jack Ablin, chief investment officer at Harris Private Bank in Chicago, said a so-called double dip is unlikely, but the idea of one is scary because the government wouldn’t have many options to revive the economy a second time.
“When you’re driving around on a spare tire, you’re on the lookout for nails,” he said.
There were no economic reports to influence the market Wednesday, but a series of reports expected today may provide some insight into consumers’ behavior. The govern- ment’s weekly report on jobless claims is due out, and retailers will report June sales results. Investors will be looking for any signs that layoffs are slowing and that consumers are feeling better about spending.
The market’s other big concern is upcoming earnings reports. Investors want to know whether companies are also seeing business slow, and if they’re changing their forecasts for the coming quarters.
Ablin said he didn’t expect Wednesday’s bounce to continue because investors are anxious about the hundreds of company reports on tap.
“I don’t think any investor wants to commit one way or another with the whole string of earnings announcements” ahead, he said.
The Dow rose 274.66, or 2.8 percent, to 10,018.28 on Wednesday. The Dow rose 57 points Tuesday. The index hasn’t risen two straight days since June 17 and 18.
The broader Standard & Poor’s 500-stock index and the tech-centric Nasdaq composite index both rose 3.1 percent.