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Old 08-28-2011, 08:47 AM   #1
simonjohn
 
Posts: n/a
Default destined to only use memory to archive

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NEW YORK — The stock market stabilized Monday as investors looked for cheap stocks after a four-week losing streak.
The Dow Jones industrial average gave up a 200-point rally and was up 45 points by late afternoon. Compared with the wild swings of earlier this month, Monday's trading was relatively calm.
Hewlett-Packard Co. rose 4 percent, the most of the 30 large companies in the Dow Jones industrial average. H-P sank 20 percent on Friday after saying it planned to sell its PC business and stop selling other products.
Bank stocks, which have been clobbered over worries about Europe's debt crisis, took another fall. JPMorgan Chase & Co. dropped 2 percent. Bank of America lost 7 percent, the biggest drop among the 30 Dow companies. Analysts at Wells Fargo cut their price target on the bank's stock, citing fears that the U.S. could slip back into a recession.
Sam Stovall, chief investment strategist at Standard & Poor's equity research, cautioned against reading too much into the market's early jump Monday.
"A two-hour rally isn't enough to change the trend," Stovall said. "It's natural in a declining market to have some days that run counter to the overall trend."
A week ago, the stock market was also in a period of relative calm. By Thursday, bad economic news returned and the Dow fell 419 points.
The S&P 500 index has lost 12 percent this month, putting the broad market measure on course for its worst August since 1998. After falling four weeks in a row, some stocks are appearing too cheap for investors to pass up, Stovall said.
Investors are still worried that the U.S. may fall into another recession. Some hope the Federal Reserve may announce some kind of action to help the economy when it holds its annual retreat in Jackson Hole, Wyo., on Friday. It was at the same conference a year ago that Fed Chairman Ben Bernanke hinted that the central bank would buy Treasury bonds to push interest rates lower.
Stovall thinks some investors are banking on Bernanke offering some soothing words in his speech Friday. "Even if the Fed just lets people know they're not asleep, that would help," he said.
The Dow rose 45 points, or 0.4 percent, to 10,863 in late afternoon trading.
The S&P 500 rose 2 points, or 0.1 percent, to 1,125. It had been up as many as 22 points. The Nasdaq was up 5 points, or 0.2 percent, to 2,347.
The Dow has lost 10 percent this month on signs that the U.S. economy is slowing. Manufacturing dropped sharply last month; there are concerns that consumers will cut back their spending, especially after they've watched stocks plunge; and earlier in August the U.S. government's credit rating was downgraded.
The Chicago Board of Options Exchange's volatility index has soared 68 percent this month. That's a sign investors are anticipating more wide swings in the S&P 500, the index most professional investors use. The index fell nearly 3 percent Monday.
Treasury bond prices and gold have been rising this month as investors seek refuge from the turmoil in stocks. The yield on the 10-year Treasury note dipped below 2 percent last week, a record low. The yield was trading at 2.09 percent Monday afternoon. Yields on bonds fall when demand for them increases.
Gold rose 2 percent to $1,892. Gold has risen 16 percent so far in August.
Eight of the 10 industry groups in the S&P 500 rose. Telecom stocks rose 1 percent, the most of any industry in the index. Boeing Co. rose 1.8 percent after Britain's Royal Air Force said it would buy 14 Chinook helicopters for $1.6 billion.
Lowe's Cos. rose 1.5 percent. The home improvement retailer said it will buy back up to $5 billion stock over the next two to three years. Last week, Lowe's lowered its sales forecast for the second half of the year as shoppers grow more worried about the economy.
Stocks have fallen for each of the past four weeks on worries that the U.S. might enter another recession. The S&P 500 index lost 4.7 percent last week. The sharpest drops came Thursday with news of weaker manufacturing in the mid-Atlantic states and an increase in the number of people who applied for unemployment benefits.
No major economic reports are due out Monday. Later in the week, traders will be sorting through figures on new home sales, chain store sales, durable goods orders and weekly claims for unemployment benefits to see if another recession could be on the way. The government will also release revised figures for second-quarter economic growth Friday. Another significant revision downward could alarm investors.
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