Stocks surged on Thursday, with the broader market rising more than 4 percent. It was the fourth day this week of major swings in stocks, following a drop on Monday, a sharp rise on Tuesday and steep declines on Wednesday.
Stocks have zigzagged to an extent that has not been seen for years. Thursday’s close was the first time that the S. P. 500 had a change of at least 4 percent for four straight trading sessions since 2008. It closed up 51.88 points, or 4.63 percent, at 1,172.64.
It was also the first time that the Dow Jones industrial average closed with a net change of 400 points or more for four straight sessions. It closed 423.37 points higher, or 3.9 percent, at 11,143.31.
Apart from calculating the records, analysts sought explanations. Some noted that the declines had reached such a point this week that stocks were buoyed by bargain-hunting investors. Others pointed to scraps of positive economic data. And some said the upturn in the market could have been caused by an easing of concerns about the financial health of some of Europe’s banks and what their problems might mean for banks in the United States.
Brad Sorensen, director of market and sector analysis at the Schwab Center for Financial Research, said those concerns appeared to have waned a bit.
“I think that has taken a little of that fear off the table,” he said.
The financial markets this week have been held hostage to worries about the global economy, Europe’s troubles and the implications of a ratings agency’s unprecedented downgrade of the United States’ credit rating. Benchmark United States bond yields have hit lows, while gold has swung above $1,800. On Thursday, the VIX index, also known as the “fear” index because it represents expectations of volatility, was down to 39 from 48 at the beginning of the week.
The market is “just a yo-yo,” said Myles Zyblock, chief institutional strategist and managing director for capital markets research at RBC Capital Markets. “I think the primary structure is still in place, and that is a structure of concern.”
“People are trying to bottom-pick today, and it might be the bottom,” said Mr. Zyblock. “I would like to see the collective message start to stabilize to give me confidence there is a hardened floor underneath this market.”
Eric Thorne, an investment advisor at Bryn Mawr Trust, called it a “shoot first, ask questions later” market.
“It is a very, very tense, emotional and momentum-driven market right now,” he said.
“Yes, the economy is slowing, but it is not anywhere near as bad as investors are acting right now,” he added. “Emotional selling that happens in periods like this is not pinpoint specific.”
Even as new economic data was released on Thursday, showing, for example, that weekly jobless claims were lower at 395,000, investors were hesitant to read too much into one piece of data in the bigger economic picture.
Some corporate results bolstered the broader market, like those of Cisco Systems. Its shares were up nearly 16 percent, helping to lift the technology sector.
The yield on the United States 10-year Treasury was at 2.33 percent, compared with 2.1 percent on Wednesday. A $16 billion auction for 30-year Treasury bonds on Thursday showed the first cracks in investor demand since Standard Poor’s downgraded the nation’s debt earlier this month. Foreign central banks, asset managers and other investors had been flocking to the safety of Treasury bonds amid the turbulent markets of the last few weeks.
Thursday’s auction suggested the buying binge was over. Yields on 30-year bonds were 3.75 percent, about 0.13 percentage points higher than the preauction estimate of 3.62 percent. American money managers sharply cut back their purchases of 30-year bonds amid concerns about the economy and the fallout from the European debt crisis, according to market participants.
Demand was stronger for the two previous auctions of shorter-dated government securities. Earlier in the week, the government sold $32 billion of three-year notes and $24 billion of 10-year securities at record low yields.
The announcement that the leaders of Germany and France would meet might have helped stocks strengthen, said Paul G. Christopher, chief international investment strategist for Wells Fargo Advisors.
“The markets need to have reassurance from governments that they are going to take care of their budget deficits and going to backstop their banks,” he said.
European indexes had been mixed, but rallied after the market opened higher in the United States.
The FTSE 100 rose 3.1 percent. The CAC 40 in Paris closed 2.89 percent higher, and the Dax in Germany gained 3.28 percent. Société Générale shares rose 3.7 percent after earlier declines. On Tuesday the stock gave up almost 15 percent of its value amid worries about the debt and economic woes of Europe and the United States.
Frédéric Oudéa, the bank’s chief executive, told Le Figaro in an interview published Thursday that the bank had “suffered a series of attacks in the market,” on the basis of rumors about its financial condition that he denied “most vigorously.”
Société Générale called Thursday on French market regulators to “investigate the origin of these rumors that have gravely impacted the interest of its shareholders.”
Christian Noyer, the governor of the Bank of France and a member of the European Central Bank’s governing council, addressed the market concerns in a statement, saying the first-half results of French banks had “confirmed their solidity in a difficult economic environment, thanks to rigorous risk management and a universal banking model based on diversified businesses.”
In Asia, the Hang Seng index in Hong Kong fell almost 1 percent, while the Nikkei 225 in Japan closed down 0.6 percent.
Gold futures briefly topped $1,817.60 an ounce, its highest ever in nominal terms, before receding to about $1,738.60. Adjusted for inflation, the record gold price would be closer to $2,400 an ounce, according to Capital Economics.
Crude oil futures in the United States were up 2 percent at $84.89 a barrel.
Eric Dash contributed reporting.
Article source: http://feeds.nytimes.com/click.phdo?i=82e56a5d5a412c22f77971270a182d95
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