February 26, 2021

Stocks and Bonds: Stocks Barely Rise After Long Losing Streak

Coming off four straight weeks of brutal losses, stocks ended barely higher on Monday, as investors’ attention turned to the Federal Reserve’s annual symposium later this week in Jackson Hole, Wyo.

After rising earlier in the session, stocks gave up most of their gains in the afternoon. Some analysts said that they expected the Fed chairman, Ben S. Bernanke, to react to recent signs of weakness in the economy by announcing further, if limited, economic stimulus when he speaks on Friday at the symposium.

Measures of global financial stress that have been rising recently, like the Japanese yen, Swiss franc and United States Treasury bond prices, eased. But in a sign that deep worries about global growth and Europe’s debt crisis still remain, gold kept up its rapid ascent of recent weeks to close up 2.2 percent at $1,888.70.

“Gold continues to earn its place among investors who want to be protected against growth risk and Europe risk,” said Mark D. Luschini, chief investment strategist at Janney Montgomery Scott.

Oil, however, was buffeted by events in Libya as investors anticipated a return to international markets of one of the world’s biggest oil producers.   Brent crude oil prices, the European benchmark price for oil, initially dropped more than 3 percent, but at the close fell 26 cents, or 0.2 percent, to $108.36.

The American benchmark crude, which is less driven by events in the Middle East, rose $2.01, or 2.4 percent, to $84.42 for October delivery.

The Dow Jones industrial average began the day higher after optimism on Libya. By the end of the day, it was up only 37 points, or 0.34 percent, at 10,854.65.

The Standard Poor’s 500-stock index, which opened higher but flirted with losses midday, closed up 0.29 of a point, or 0.03 percent, at 1,123.82. The Nasdaq composite index rose 3.54 points, or 0.15 percent higher, to 2,345.38.

The Treasury’s 10-year note fell 12/32, to 100 5/32. The yield rose to 2.11 percent, from 2.07 percent late Friday.

Shares in Goldman Sachs dropped 4.7 percent. They fell sharply before the close after Reuters said that its chief executive, Lloyd Blankfein, had hired a prominent defense lawyer.

Shares of Hewlett-Packard, which had suffered in recent sessions, ended up 3.6 percent.

Last week, stocks in general fell more than 4 percent as Wall Street experienced more wild swings, including a 419-point drop for the Dow on Thursday.

Some analysts said that the recent sell-offs now presented a buying opportunity for investors.

“We suspect that the recent market downdraft will eventually be viewed as a buying opportunity for those who are willing to look beyond the most recent data point,” Barclays Capital analysts said in a research note.

Traders are now focusing their attention on weekly jobless claims data expected to be released Thursday. But the main event will be Mr. Bernanke’s assessment Friday of the economy.

Some Wall Street analysts expect the Fed to take some action — perhaps the lengthening in maturity of the bonds it holds — to depress longer-term interest rates.

“We do not expect Bernanke in his Aug. 26 address to unilaterally announce the start of a bold new easing initiative,” Neal Soss, the chief economist at Credit Suisse, wrote in a report. “But we are looking for the chairman to hint strongly that further monetary policy accommodation is on its way.”

It was in Jackson Hole last year that, faced with similar signs of an economic slowdown, Mr. Bernanke signaled a second round of large-scale bond purchases, or quantitative easing, called QE2 for short. After the program was announced, stocks rose about 28 percent between August and February this year.

Still, many investors remain nervous about Europe and its debt problems. Even after Monday’s rise, the S. P. 500 was down 17.4 percent from its recent peak on April 29, close to bear market territory, which is defined as a drop of 20 percent.

In Europe, where losses in recent sessions have been as severe as in the United States, stocks were mixed. In Britain, the FTSE 100 closed up 1.1 percent. In Germany, the DAX was down 0.1 percent.

Some analysts warned it would not take much to push the markets back into negative territory.

“We’re just seeing a natural reaction after the sharp falls at the end of last week,” said Elisabeth Afseth, a fixed-income analyst at Evolution Securities in London. “But the situation is still very uncertain and fragile.”

Clifford Krauss and Julia Werdigier contributed reporting.

Article source: http://www.nytimes.com/2011/08/23/business/daily-stock-market-activity.html?partner=rss&emc=rss

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