Dow leaps 286 points; best day of the year
Wednesday, June 6, 2012
NEW YORK (AP) — The Dow Jones industrial average surged 286 points, its best day this year.
The Dow jumped 2.4 percent to close Wednesday at 12,415. The gain turned the index positive for the year and erased a 275-point plunge set off by a dismal U.S. jobs report last Friday.
In other trading, the Standard & Poor’s 500 index rose 30 points to 1,315. The Nasdaq composite index jumped 67 to 2,845.
Seven stocks rose for every one that fell on the New York Stock Exchange. Trading volume was slightly higher than average at 4.1 billion shares.
The big jump follows weeks of losses, including a 275-point plunge last Friday set off by a surprisingly weak reading on the U.S. job market. Hope that European officials would find ways to ease the region’s debt crisis helped launch the rally Wednesday. Reuters reported that Germany and European Union officials were moving quickly to find a way to rescue Spain’s hobbled banks.
“It’s all rumors,” said Jeff Kleintop, chief market strategist for LPL Financial. “There’s no real event yet.”
The chatter was enough to convince some traders that the worst was over for now. Worries about Greece and Spain have helped pull the Standard & Poor’s 500 index down nearly 10 percent since it peaked on April 2. “The next 10 percent move is not down, it’s up,” Kleintop said.
LPL has started to pull back on bets against the S&P 500 and the euro. To close a short trade against an asset, investors have to buy an asset they previously sold. “We’ve decided it’s time to declare victory,” Kleintop said.
A speech by a Federal Reserve official also added to speculation that the Federal Reserve may take more steps to bolster the U.S. economic recovery. Dennis Lockhart, president of the Fed’s Atlanta regional bank, says weak job growth over the past two months highlighted the “halting and tenuous” recovery. If the trend continues, “further monetary actions to support the recovery will certainly need to be considered,” he said.
Federal Reserve Chairman Ben Bernanke will likely be asked about more actions to help the economy when he testifies before a congressional committee on Thursday.