Mortgage Plan Gives Stocks a Boost
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Friday, January 9, 2009
NEW YORK, Jan. 8 -- A deal to help head off more mortgage foreclosures pulled Wall Street out of a slump Thursday, giving stocks a mostly higher close.
The Dow Jones industrial average fell 27.24, or 0.3 percent, to close at 8742.46 after being down as much as 119. Broader stock indicators advanced. The Standard & Poor's 500-stock index rose 3.08, or 0.3 percent, to 909.73, and the Nasdaq composite index rose 17.95, or 1.1 percent, to 1617.01.
Democratic lawmakers reached an agreement with Citigroup on a plan to let bankruptcy judges alter loans in an effort to prevent homes from going into foreclosure. Other lenders are expected to follow suit. The agreement raised hopes that the steep downturn in the housing market that has badly hurt consumer spending and the overall economy could be halted. Housing stocks rose on the news.
"Any sort of arrangement that can stave off foreclosure and modify existing mortgages, all of those things will help to get to the bottom of the housing market decline. And only then can we see a real turnaround in the economy," said Randy Frederick, director of trading and derivatives at Charles Schwab.
Wall Street was down for much of the session after a profit warning from Wal-Mart Stores intensified fears that consumers are even worse off than previously thought. Their reluctance to spend -- evident in retail sales reports Thursday from many of the nation's biggest merchants -- could make it harder for the country to recover from the recession.
The market's fears about the economy have been focused on the job market. The Labor Department said the number of new claims for jobless benefits unexpectedly dipped last week, but the number of people continuing to file claims rose to a 26-year high. And many economists think the government will report on Friday another massive jobs loss for December.
"The market has been bracing itself for a pretty grim number," said Craig A. Peckham, market strategist at Jefferies & Co.
The dollar fell against most other currencies, while gold prices rose. Light, sweet crude fell 93 cents, to settle at $41.70 a barrel, on the New York Mercantile Exchange.
Movers
Wal-Mart fell $4.16, to $51.38.
Limited Brands dropped 70 cents, to $10.
Target rose 51 cents, to $37.52.
Lennar gained 85 cents, to $11.42.
Toll Brothers rose $1.01, to $21.70.
