Reports of Government Mortgage Aid Inspire Mid-Afternoon Rebound
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Friday, February 13, 2009
NEW YORK, Feb. 12 -- The stock market made a strong late-day comeback Thursday on hopes that homeowners will get more help with their mortgages.
The Dow Jones industrial average slipped 6.77 points, or 0.1 percent, to 7932.76, after falling by more than 245 points in earlier trading. The blue-chip index got within 142 points of its Nov. 20 close of 7552.29, which was a 5 1/2 -year low. Broader stock indicators ended higher. The Standard & Poor's 500-stock index rose 1.45, or 0.2 percent, to 835.19, and the Nasdaq composite index rose 11.21, or 0.7 percent, to 1541.71.
Stocks rebounded from their lows following a Reuters report that the government may subsidize troubled homeowners' mortgage payments. The Federal Housing Finance Agency declined to comment on the report.
This week has been turbulent for stocks, which rallied last week in anticipation of the stimulus package and the financial bailout plan. That rally was erased Tuesday after Treasury Secretary Timothy F. Geithner said the government will boost lending, determine which banks should get extra funding and remove toxic assets from banks' books -- but provided few details about how the plans would work.
"The market is saying, we will give you the capital when we know you've told us the truth about the garbage," said David Darst, chief investment strategist of Morgan Stanley's Global Wealth Management Group.
But the idea of a plan focused on the crux of the economy's problems -- the housing market -- came as at least a temporary relief to investors. If more homeowners are able to pay their mortgages, it would not only help the economy, but also keep mortgage-backed assets from losing more value.
The biggest gainer in the Dow on Thursday was Coca-Cola, which posted an 18 percent drop in fourth-quarter earnings but topped Wall Street's forecast. Coca-Cola shares rose $3.12, or 7.6 percent, to $44.39.
Another bright spot was a new low for the year in oil prices. Light, sweet crude sank $1.96, more than 5 percent, to settle at $33.98 a barrel on the New York Mercantile Exchange.
Government bond prices were mostly lower. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.79 percent, from 2.76 percent late Wednesday.
