Bargain hunters return to market
US stocks ended slightly higher yesterday after four weeks of losses as investors hesitated to take big risks without a catalyst for buying.
The market was led by large-cap techs and industrials until late in the session when a rally faded.
Banks struggled, with Bank of America, the largest US bank, falling 7.9 per cent to $6.42, the biggest drop among the Dow’s components. Chief executive Brian Moynihan sent a memo to senior executives last week outlining plans to cut another 3,500 jobs. JP Morgan Chase lost 2.7 per cent to $33.41.
“The ground zero of all worries is financials,” said Charlie Smith, chief investment officer of Pittsburgh-based Fort Pitt Capital Group.
Google, Hewlett-Packard and IBM, were among the top gainers. Hewlett-Packard shares came back from a 20 per cent decline on Friday in its worst day since 1987, closing at $24.45.
The S&P 500 has dropped 12.7 per cent so far in August on fears of another recession and the intractable European debt crisis. The rebound came on lower volume than in recent days of selling.
“I don’t see any major appetite for buying stocks. We are driven higher [today] because of selling exhaustion,” said James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.
One possible spark for the market could be Federal Reserve chairman Ben Bernanke’s Friday speech in Jackson Hole, Wyoming. Some in the market hope Bernanke will hint at additional stimulus measures that could buoy stocks.
“Until we get some kind of a catalyst from Europe regardingthe sovereign debt crisis or from the Fed later this week, I expect range-bound trading with high intraday volatility,” said Dailey.
The Dow Jones industrial average was up 36.85 points, or 0.34 per cent, at 10,854.50. The Standard & Poor’s 500 Index was up 0.29 points at 1,123.82. The Nasdaq Composite Index was up 3.54 points at 2,345.38.
Yesterday, Credit Suisse cut its year-end target for the S&P 500 to 1,100 from its previous level of 1,275. US equity strategist Doug Cliggott cited expectations for lower earnings in coming quarters and little hope for price-to-earnings multiples to expand.
After the closing bell, shares of Goldman Sachs fell 2.4 per cent to $104. Goldman Chief Executive Lloyd Blankfein has hired Reid Weingarten, a high-profile Washington defense attorney.