Wall Street snaps back from three-day slide
US stocks stage a strong rebound as investors swoop in for beaten-down shares after a three-day drubbing.business Updated: Jun 09, 2007 04:38 IST
US stocks staged a strong rebound on Friday as investors swooped in for beaten-down shares after a three-day drubbing and drew encouragement from a report showing a narrowing of the US trade deficit.
The Dow Jones Industrial Average leapt 156.20 points (1.18 per cent) to 13,422.93 and the Nasdaq composite advanced 32.16 points (1.27 per cent) to 2,573.54 at the closing bell.
The Standard & Poor's 500 broad-market index climbed 16.45 points (1.10 per cent) to a preliminary close of 1,507.17.
The snapback came after a sharp three-day selloff resulting from a huge spike in bond yields as investors shifted away from expectations of a rate cut by the Federal Reserve to a possible rate hike.
Andy Brooks, head of equity trading at T Rowe Price, said the market appeared to realise that conditions are not as bad as feared in the past few sessions.
"That period of consolidation is healthy for the market," he said. "You can't go up every day."
Brooks said he remained "pretty optimistic" but believed some further consolidation is due.
"Valuations are reasonable, prospects for earnings growth are reasonable," he said.
Even though yields on the 10-year Treasury bond have spiked above five per cent, he said," that's not so bad that it would cause a major allocation out of stocks into bonds."