US indices stage last-minute rally
By A. Gray in New York
The Financial Times
Published: December 5 2008 13:52 | Last updated: December 5 2008 22:10
Spectacular gains among insurers helped Wall Street stocks shrug off dire US employment figures and end a volatile week with a strong rally.
jumped 22.5 per cent to $30.76 and 34.7 per cent to $28.52, respectively, ahead of a state insurance regulator meeting this weekend, which could result in more relaxed capital requirements.
A UBS note that said regulatory changes could come as soon as next Tuesday also provided support to the sector.
Hartford Financial Services
topped the leader board in reaction to its well received investor day presentation. The battered stock soared 102.4 per cent to $14.59 after the company said it was well capitalised.
The benchmark S&P 500 index closed up 3.7 per cent at 876.07, the Dow Jones Industrial Average 3.1 per cent higher at 8,635.42 and the Nasdaq Composite index was 4.4 per cent stronger at 1,509.31.
The rally – albeit in light volume – came in spite of closely-watched Labor Department payroll figures that were much worse than even the most dire predictions.
In reaction to the figures, the benchmark S&P 500 dropped as much as 3.2 per cent earlier in the session to test a weekly low of 815 that had been hit during a heavy sell-off on Monday.
But traders appeared to be encouraged when the market failed to break through the key technical level, and the market subsequently rallied into the close.
“There’s a lot of things you can use to predict a bottom. One of them is when the market stops reacting adversely to negative news,” said Randy Frederick, director of trading and derivatives at Charles Schwab.
The reaction to the steepest job losses since 1974 was the latest example this week of a rally despite bleak news.
Retailers gave bulls a faint glimmer of hope when traders shrugged off the worst monthly sales performance this decade. The S&P Retail index was up 6 cent for the week in spite of the release of November sales figures that were nevertheless not quite as dire as the most pessimistic predictions.
helped the sector with well received sales and shares in the discounter were up 4.2 per cent to $58.21 for the week.
which disclosed a sharp drop in like-for-like sales, finished the week up 16 per cent at $8.61.
Friday’s rally helped the S&P pare its losses for the five-day period to 2.3 per cent, the Dow was down 2.2 per cent and the Nasdaq 1.7 per cent lower.
The Chicago Board Options Exchange Volatility index, known as Wall Street’s “fear gauge”, shot up 7.8 per cent over the week and at 59.57 it indicated elevated signs of distress. The energy sector led weekly declines as it fell 11.3 per cent on a sharp slide in oil prices.
The future of the ailing US car industry was among primary investor concerns as executives returned to Capitol Hill to plead for a $34bn bailout. General Motors
finished the week down 22.1 per cent to $4.08 although Ford
, which said it expected to at least break even by 2011, was up 1.1 per cent to $2.72.
Defensive stocks failed to offer investors a haven – Coca-Cola
and Procter & Gamble
fell 1.9 per cent to $45.98 and 2.7 per cent to $62.63, respectively – but there were bright spots elsewhere.
Homebuilders finished the week 19.5 per cent higher amid reports that the Treasury Department was working on a plan to reduce mortgage rates on new home loans.
Also helping the sector were data from the Mortgage Bankers Association showing that its measure of mortgage application volumes had jumped the most last week since the index was created in 1990.
On Friday, the financial sector rallied 8.6 per cent to lead the gains ...