|
HANDS UP, THOSE WHO ARE CLUELESS: Investors are uncertain as to how long the current crisis will last. -- PHOTO: AFP
|
NEW YORK - UNITED States stocks are on a wild ride, swinging back and forth as traders seize on daily events to jump in - or out - of the market, grasping at clues about where the economy is heading.
The result: a jittery, bewildered pack of investors whose mood can quickly swivel between fear and optimism.
In the latest of a string of sharp moves, US stocks surged on Monday after last-minute negotiations salvaged the rescue of Bear Stearns and housing sales snapped a six-month streak of declines.
The Dow Jones Industrial Average closed on Monday at 12,548.64, up 1.5 per cent, or 187.32 points - its ninth triple-digit swing in a dozen trading sessions.
Volatility in the broad Standard & Poor's (S&P) 500-stock index stood at a 70-year high, as measured by daily changes of 1 per cent or more.
A week ago, the Dow gained 420 points, its best daily advance in five years. It promptly plummeted 293 points, only to gain back 261 points a day later.
'It's bizarre,' said Mr Howard Silverblatt, the senior index analyst at S&P. 'The volatility is enormous. The swings, one side to the other...each event moves the market in extremes.'
On Monday, investors focused on the good news from the housing market and Bear Stearns. But even the day's positive developments came with a share of caveats.
The new deal by JPMorgan Chase to buy Bear Stearns was seen by some investors as a sign that confidence was returning to credit markets. JPMorgan upped its bid for Bear Stearns fivefold to US$10 a share from US$2. Bear Stearns' stock finished on Monday at US$11.25, up 89 per cent.
But the bank's virtual collapse has reinforced anxieties that the current financial crisis may be one of the worst in decades. And for the most part, investors were still reluctant to buy securities that may turn sour. Shares of financial services firms ended the day mixed.
The US housing figures also offered a mixed picture. Sales of previously owned homes rose unexpectedly last month when they were expected to continue to fall. Inventories of unsold homes, which have ballooned over the last year, fell back slightly.
Still, home prices continued to plunge as sellers capitulated and slashed prices - good news for buyers but bad news for sellers, who suffered sharp drops in the value of their homes.
'Opinions are really sharply divided,' said Mr Brian Gendreau, a strategist at ING Investment Management. 'Is this going to be a short and shallow recession? Or the beginning of the end of the world as we know it?'
As investors headed home on Monday evening, few were certain about what to expect in the morning.
REUTERS
|
