After long slide, stocks catch a break
By Bloomberg News,
U.S. stocks rose, breaking a four-week losing streak in the Standard & Poor’s 500-stock index, after Federal Reserve Chairman Ben S. Bernanke indicated the economy isn’t deteriorating fast enough to warrant more stimulus.
Bank of America rallied 11 percent last week after Warren Buffett’s Berkshire Hathaway invested $5 billion. MEMC Electronic Materials jumped 18 percent, leading a rally in solar stocks, as Goldman Sachs Group said the industry is close to botttoming. Apple rose 7.7 percent even after Steve Jobs stepped down as chief executive.
The S&P 500 rose 4.7 percent to 1176.80. The index had plunged 16 percent between July 22 and Aug. 19, the most in four weeks since March 2009. The Dow Jones industrial average added 466.89 points, or 4.3 percent, to 11,284.54.
“We’ve got our problems, but they’re ones we can come out of,” Don Hodges of Hodges Capital Management, which has $700 million in assets under management, said during an interview in New York. “It feels like we’re reaching for a bottom now, that we’re beginning to pick up. We are buyers.”
Stocks dropped and then rebounded Friday after Bernanke’s speech, in which he said the central bank has tools to stimulate the economy, without signaling he will use them. He echoed comments from dissenting members of the Federal Open Market Committee who said data aren’t pointing to a recession.
Investors piled into U.S. equities, trading at the cheapest price-earnings ratios since 2009. The Treasury will sell $29 billion in three-month bills and $27 billion in six-month bills on Monday. They yielded 0.005 percent and 0.025 percent in when-issued trading.
— Bloomberg News