NEW YORK – Wall Street's wildest week since 2008 continued with another 300-point move for the Dow on Thursday. This time, stocks shot up after investors saw small signs that the economy isn't headed into another recession.
Fewer Americans joined the unemployment line last week and a technology bellwether said revenue could grow faster this quarter than analysts expected. The news pushed gold prices down from record highs and sent prices on long-term Treasurys down.
The Dow Jones industrial average rose 283 points, or 2.6 percent, to 11,003 at 12:38 p.m. in New York. It had been up as many as 309 points a little before 11 a.m.
During a calm market, a 300 point move would rank as the Dow's biggest in months. This week, it's the smallest. The Dow has been volatile all week. On Monday, it plunged 634 points only to gain 429 points Tuesday and sink 519 points Wednesday. It's the first time that the Dow has moved by more than 400 points in three straight days since November 2008, when markets were tumbling during the financial crisis.
Carlton Neel, who manages about $2 billion as a senior portfolio manager at Virtus Investment Partners said investors are so scared of being the last one out of the market in a downturn or the last one in during a rally that they are stampeding in herds, creating more volatility.
"Fear tends to be a much more powerful emotion, and the sell-offs tend to be more violent than the rallies," he said. "But people are worried about missing the bottom, so you will have a few melt-ups along the way." That's because memories of the last meltdown in 2008 are still fresh in the mind of many investors.
Thursday's gain came after the government said the number of people filing for unemployment benefits for the first time fell to 395,000 last week, down 7,000 from a week earlier. It's the first time the number has dropped below 400,000 in four months.
Analysts said it may be a sign that the job market is slowly improving after its three-month slump. Job growth slowed to an average of 72,000 in May, June and July. In the previous three months, employers added 215,000 jobs per month, on average.
"It's the first scrap of economic data we've had recently that says the idea that we're going into another recession may be overdone," Neel said.
In the last few weeks, investors have grown more worried about the economy. The government said last month that it grew at its slowest pace in the first half of 2011 since the recession ended in 2009. Unemployment is still above 9 percent.
The S&P 500 index rose 33, or 3 percent, to 1,154. The Nasdaq composite index rose 74, or 3.1 percent, to 2,456.
Technology stocks helped lead stocks higher. Cisco Systems Inc. profit for the latest quarter topped analysts' expectations. Cisco is considered a bellwether for the tech industry because it is the world's largest maker of computer networking equipment. The company also said revenue may grow more quickly in the current quarter than analysts were anticipating. Cisco rose 16.5 percent. As a group, tech stocks in the S&P 500 rose 3.6 percent.
Financial stocks also rebounded from their steep drop Wednesday, up 4.1 percent after a 7.1 percent drop a day earlier.
The leaders of France and Germany, the region's biggest economies, said they will meet next week to talk about how to solve Europe's financial difficulties. Worries that Europe's debt problems could hurt the banks that own European government bonds have weighed heavily on financial stocks and the broader market. Pain for European banks could lead to more trouble for the U.S. banking industry and economy because the global financial industry is so closely linked. That has been one reason stocks have declined in the last several weeks.
Reports also circulated that European markets were considering a ban on selling stocks short, which is a way that traders bet a stock will fall.
Rumors have been a big force in driving the market in the last week. On Friday, speculation that Standard & Poor's may downgrade the U.S. from its top AAA credit rating helped knock down stocks. It turned out to be correct.
This week, speculation has centered on European banks, French ones in particular. The head of France's central bank said Thursday that the country's banks are solid and blamed "unfounded rumors" for big drops in their stocks.
In the U.S., media conglomerate News Corp., which owns Fox News and The Wall Street Journal, rose 19.1 percent. It reported earnings late Wednesday that were better than analysts expected.
Prices for longer-term Treasurys fell, as investors felt less need to put their money in investments considered safe. The yield on the 10-year Treasury note rose to 2.21 percent from 2.11 percent late Wednesday. A bond's yield rises when its price falls.
Investors had been pouring into Treasurys earlier in the week, and they briefly knocked the 10-year yield to a record low of 2.03 percent Tuesday afternoon. Treasurys have held onto their reputation as a safe place to put money even after S&P cut the U.S. credit rating to AA+.
Gold also benefited early this week from buyers looking for something safe. It rose above $1,801 per ounce for the first time on Wednesday as stock markets tumbled around the world. But it fell to $1,771.10 Thursday.
CME Group raised the amount of money that investors must put up to buy a gold contract on its COMEX exchange by 22 percent late Wednesday, driving prices off all-time highs above $1,800 per ounce as some investors were forced out.
The Dow's climb on Thursday pulls the average further away from bear market territory: The Dow ended Wednesday at 16.3 percent below its high for the year, set on April 29. A drop of 20 percent would mean the bull market that began in March 2009 has turned into a bear, a long period of stock declines.
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