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The volatile run of the markets ended with modest gains, which was also marked one of the busiest days of trading since mid-March. Uncertainty over economic growth kept investors jittery, though the benchmarks escaped recording their longest losing streak since Jimmy Carter’s days in the White House. Traders believe the rebound was partially led by former Federal Reserve Vice Chairman Donald Kohn’s comments about the Fed considering a new stimulus plan, which brought the buyers into the market.
As the day began, investors were once again bogged down by concerns about the economy and the markets opened with steep losses. The Dow Jones Industrial Average (DJIA) dipped 166 points before recouping its losses to settle at 11,896.21, up 0.3%. The Standard & Poor 500 (S&P 500) added 0.5% to finish the day at 1,260.36. The Nasdaq Composite Index closed with gains of 0.9% at 2,693.07. On most occasions over the past several days the markets have been posting below average volumes. However, yesterday saw one of the busiest trading sessions with roughly 10.5 billion shares changed hands on the New York Stock Exchange, Amex and Nasdaq as compared to the daily average of around 7.48 billion. On the NYSE, advancers outpaced the decliners by 1,725 to 1,274.
The Dow traded in the red during the opening session and looked set to match its longest losing streak of nine days, last recorded in February 1978. Nine out of the thirty Dow components had to miss out ending in the positive zone, while the gains were led by Walt Disney Co. (NYSE:DIS), General Electric Co. (NYSE:GE), Intel Corporation (NASDAQ:INTC), The Coca-Cola Company (NYSE:KO), 3M Co. (NYSE:MMM), Verizon Communications Inc. (NYSE:VZ) and AT&T, Inc. (NYSE:T) and they were up 1.2%, 1.5%, 1.4%, 2.0%, 1.1%, 1.4% and 1.1%, respectively.
As for the S&P 500, the index hit its lowest level for the year at 1,234 before rebounding. The key index that is followed by money managers had also comfortably snapped its seven-day losing streak by the end of the day. However, a number of investors were of the view that the rebound in the S&P 500 will be short lived and the index had lost 6.8% over the seven days when it booked its place in the red zone. The technology sector moved up 1.2% and was one of the gainers in the S&P 500. Technology stocks like Microsoft Corporation (NASDAQ:MSFT), Dell Inc. (NASDAQ:DELL), Cisco Systems, Inc. (NASDAQ:CSCO), Juniper Networks, Inc. (NYSE:JNPR), F5 Networks, Inc. (NASDAQ:FFIV) and Oracle Corp. (NASDAQ:ORCL) were up 0.5%, 0.7%, 0.2%, 3.7%, 3.5% and 2.2%, respectively.
Traders opined that a report in the Wall Street Journal had sparked the rally, as the website stated the last three directors of the Fed’s monetary affairs division, Donald Kohn, Vincent Reinhart and Brian Madigan supported a new stimulus plan which the Federal Reserve might consider implementing.
Also, technology stock Research In Motion Limited (NASDAQ:RIMM) jumped 4.9%, which also contributed to gains in the tech-laden Nasdaq, after it unveiled two new versions of BlackBerry Torch.
The decline during the opening session was also due to data on the services sector released by the Institute for Supply Management. The nation’s services sector posted its slowest pace of growth since February last year. According to the report: “The NMI registered 52.7 percent in July, 0.6 percentage point lower than the 53.3 percent registered in June, and indicating continued growth at a slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index increased 2.7 percentage points to 56.1 percent, reflecting growth for the 24th consecutive month and at a faster rate than in June. The New Orders Index decreased by 1.9 percentage points to 51.7 percent.
Separately, the Commerce Department reported a decline in factory orders for the month of June. The U.S. Census Bureau reported: “New orders for manufactured goods in June, down two of the last three months, decreased $3.8 billion or 0.8 percent to $440.7 billion. This came in contrary to the 0.6% increase in new orders in May.