Bargain Hunters Shoot Stocks Up 550

Wall Street launched a massive rebound Thursday, sending the Dow Jones industrial average up nearly 553 points at closing after driving it below the 8,000 mark, as investors decided they did not want to miss out on buying stocks at cheap prices.

The Dow closed around the 8,800 mark; during the day it did not sink below its Oct. 10 trading low of 7,882.51.

After three days of selling that wiped out about $1 trillion in shareholder value, many investors, though nervous about the economy, believed the market had priced in enough bad news. So when the Standard & Poor's 500 index managed to recover from multi-year trading lows, investors swarmed back in.

It's "a herd mentality," said Ryan Larson, senior equity trader at Voyageur Asset Management. "We started going higher - and you don't want to be the last one on the boat."

As stocks rallied, so did oil prices, sending shares of energy companies higher. The biggest gainer among the 30 Dow companies was Chevron Corp., which rose $8.43, or 12.5 percent, to $75.71. Another big gainer was Exxon Mobil Corp., which climbed $6.48, or 9.4 percent, to $75.41; these two energy stocks represented one-fifth of the Dow's point gain Thursday.

The stock market's initial selloff began after the Labor Department reported that the number of newly laid-off individuals seeking unemployment benefits jumped last week to a level not seen since just after the Sept. 11, 2001, terrorist attacks.

And there were more signs of a severe pullback in consumer spending, a troubling trend that had pummeled stocks earlier in the week. Wal-Mart Stores Inc. trimmed expectations for full-year earnings, and Intel Corp. late Wednesday cut more than $1 billion from its sales forecast, providing more evidence that few industries are safe from a clampdown on spending by businesses and consumers alike.

But then the S&P lifted above its Oct. 10 trading lows, and a Treasury auction of 30-year bonds got decent demand from both domestic and foreign buyers, said Arthur Hogan, chief market analyst at Jefferies & Co. The auction results alleviated some fears that the government will have a hard time financing its costly bailout.

Hogan called it a "great sign" that the S&P recovered after falling below its Oct. 10 trading lows. "Historically, if you test a low within 45 days and close above it, it's very bullish," he said.

According to preliminary calculations, the Dow rose 552.59, or 6.67 percent, to 8,835.25, after falling as low as 7,965.42 and rising as high as 8,876.59. That's a trading range of 911 points. The Dow did not sink below its Oct. 10 trading low of 7,882.51.

The Dow's nearly 553-point gain was the third-largest single-session point gain on record, following the 889-point rise on Oct. 28 and the 936-point surge on Oct. 13.

The Standard & Poor's 500 index rose 58.99, or 6.92 percent, to 911.29, after dropping to 818.69 - well below its intraday low of 839.80 on Oct. 10.

The Nasdaq composite index rose 97.49, or 6.50 percent, to 1,596.70.

The Russell 2000 index of smaller companies rose 38.43, or 8.5 percent, to 491.23.

The stock market gained back $700 billion Thursday, after losing about $1 trillion during the first three days of the week, according to the Dow Jones Wilshire 5000 index, which reflects the value of nearly all U.S. stocks. At its lowest trading level Thursday, the market value of the Wilshire index fell below $10 trillion for the first time since April 2003.

Advancing issues outpaced decliners by nearly 3 to 1 on the New York Stock Exchange, where volume came to 1.99 billion shares.

The price of a barrel of light, sweet crude rose $2.08 to $58.24 on the New York Mercantile Exchange, after falling to the lowest levels since January 2007.

Government bond prices fell as investors fled back into stocks. The three-month Treasury bill's yield rose to 0.20 percent from 0.13 percent late Wednesday, and the yield on the benchmark 10-year Treasury note rose to 3.88 percent from 3.67 percent late Wednesday. Higher yields indicate lower demand.

Wal-Mart shares rebounded $2.31, or 4.4 percent, to $54.93. The discount retailer's shares had traded lower in earlier trading after it cut its profit outlook because of the flagging global economy and renewed strength of the dollar. Wal-Mart is the only company among the Dow industrials that is up for the year.

Intel also slashed its outlook, initially driving down shares on concerns that consumers are shying away from big purchases like computers. But its shares recovered to trade up 91 cents, or 6.7 percent, to $14.43.

General Motors shares, however, remained weak as the nation's automakers wait for President-elect Obama to push Congress to approve a bailout of the struggling industry. There are also reports that Obama will move to appoint a czar or board to oversee the companies. GM dropped 13 cents, or 4.2 percent, to $2.95. Ford shares rose 6 cents, or 3.3 percent, to $1.90.

The dollar was mixed against other major currencies. Gold prices rose.

Overseas, Japan's Nikkei closed down 5.25 percent and Hong Kong Hang Seng fell 5.15 percent. In European trading, London's FTSE 100 was down 0.31 percent, Germany's DAX rose 0.62 percent, and France's CAC-40 added 1.10 percent.