March 2, 2021

Volatile Wall Street Ends the Day Mixed

Stock indexes on Wall Street bounced around like a yo-yo on Friday, a day after they lost 4 percent of their value.

After a quick sigh of relief on better-than-expected jobs numbers at the opening, Wall Street moved lower as fears continued to hang over markets that the United States and Europe were not doing enough to counter their economic problems.

But then stocks moved up after indications that high-level conversations among European leaders were making progress in addressing investor concerns.

The stock market continued on the positive side after Prime Minister Silvio Berlusconi of Italy said his country would “accelerate measures” in an austerity program, with the “aim of a balanced budget in 2013.”

He also said the Group of 7 industrial nations would meet within a few days. And Angela Merkel, chancellor of Germany, said approval for the rescue package for Greece, that was finally agreed last month during a special summit of euro zone leaders, would be speeded up.

The three major Wall Street indexes were all over the map at the close, just as they were during the day. The Dow Jones industrial average was up 60.93, or 0.54 percent, to 11,444.61. But the broader Standard Poor’s 500-stock index was off less than a point to 1,199.38. The Nasdaq composite, meanwhile, was down 23.98 points, or 0.94 percent, to 2,532.41.

Speculation mounted through the day that the European Central Bank would start to buy the bonds of Spain and Italy, the two countries where investor fears about the festering credit crisis are now centered. When the central bank failed to intervene in those two countries Thursday, the markets were spooked by the apparent disconnect.

Lena Komileva at Brown Brothers Harriman in London agreed there were signs Friday that some national central banks in Europe were in the market buying Spanish and Italian government bonds.

“I see a reasonable chance they do change their stance over the weekend,” said Holger Schmieding, chief economist at Berenberg Bank in London, said about the central bank’s hesitation Thursday.

Still, the volatility was likely to continue as the overall market sought a clear direction in the face of economic statistics that were open to interpretation, though far from bullish.

United States employment growth accelerated more than expected in July as private employers stepped up hiring.  The nonfarm payrolls number rose by 117,000, the Labor Department said, above market expectations for a gain of 85,000. And the unemployment rate dipped to 9.1 percent from 9.2 percent in June.  

“There’s still a recovery but it’s teetering on the edge,” said Robin Marshall, director of investment management at Smith Williamson in London. More than two years into a recovery, he said, much stronger labor data should be expected.

The Euro Stoxx 50 index zigzagged as well: It was down 1.54 percent after reversing early losses and shooting up 1.6 percent. The DAX in Frankfurt moved briefly into positive territory then fell again, ending down 2.78 percent. The French CAC 40 was off 1.26 percent. Yields on Italian and Spanish government bonds, which have risen sharply in recent weeks suggesting their debt situations may be spiraling out of control, fell slightly on Friday. But they remained worryingly above 6 percent.

Some gauges of stress in the European banking system remained high, suggesting some banks are struggling to finance themselves in increasingly difficult credit markets in Europe.

Also of concern to analysts was a widening spread between the yields on German and French government bonds, providing a sign of a split right at the heart of the euro zone. Credit default swap rates on government debt also remained high.

Luc Van Heden, chief strategist at KBC Asset Management in Brussels, said the prospect of a double dip recession in the United States was becoming even more of a concern than the sovereign debt crisis in Europe.

“We’ve known about the euro’s debt crisis for months,” he said. “Fears of a double dip in the U.S. are making the market very, very nervous at the moment.”

The jobs report gave few analysts much hope. “It’s an encouraging figure but it’s hardly booming,” said Ryan Sweet, an economist at Moody’s, about the number of new jobs created. “Right now, the recovery is lacking vigor.”

This article has been revised to reflect the following correction:

Correction: August 5, 2011

An earlier version of this article misspelled the first name of France’s president. He is Nicolas (not Nicholas) Sarkozy.

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