NEW YORK Wall Street scored its second straight big advance Thursday after economic figures suggested the job market is holding up and as lawmakers promised measures that could ease concerns about consumer spending. The Dow Jones industrials rose more than 100 points, bringing its two-day gain to more than 400.
While stocks fluctuated throughout the session, trading was decidedly more calm than on Wednesday, when Wall Street executed a stunning turnaround that transformed a sharp sell-off into big gains for stocks. Thursday's rise was notable, however, as investors will often move in a day after a rally or plunge to take profits or scoop up bargains. That the buying largely continued was a positive sign, observers said.
Investors were clearly interested in buying, but despite the size of the advance, there didn't appear to be much conviction it the market is still searching for clues about the economy in hopes of determining whether it will soon pick up or perhaps slow and tip into recession.
In addition, the market wobbled during the session after Fitch Ratings lowered its rating on bond insurer Security Capital Assurance Ltd. Bond insurers have been hurt in the fallout from the mortgage and credit crises, and news of their problems has shaken the market.
But those seeking good news found some in a Labor Department report that said the number of people seeking unemployment benefits last week fell for a fourth straight week. Applications for benefits dropped 1,000 to 301,000, pushing claims down to the lowest level in four months.
Investors also appeared pleased by a widely anticipated agreement between Congressional leaders and the White House on an economic stimulus package. The agreement calls for most tax filers to be given refunds of $600 to $1,200, and more if they have children.
Bill Dwyer, chief investment officer at MTB Investment Advisors in Baltimore, said Wall Street found some relief from word of the economic stimulus plan as well as the efforts of regulators to help bond insurers. He said the Federal Reserve's decision to lower interest rate this week could also help some struggling homeowners hold onto their properties. The efforts, he said, could ultimately help stave off recession.
"People have that 'R' word stuck on the front of their forehead. It's really just a dramatic slowing of growth. We may not have a recession," Dwyer said.
According to preliminary calculations, the Dow Jones industrial average rose 108.44, or 0.88 percent, to 12,378.61, following a nearly 300 point surge on Wednesday. The Dow has not finished higher for two straight sessions since Jan. 9-10.
Broader stock indicators also rose. The Standard & Poor's 500 index rose 13.47, or 1.01 percent, to 1,352.07, and the Nasdaq composite index advanced 44.51, or 1.92 percent, to 2,360.92.
Advancing issues outnumbered decliners by 4 to 3 on the New York Stock Exchange, where volume came to 2.18 billion shares.
The Dow on Wednesday swung 631.86 points from its low point to its high its largest single-day reversal in more than five years.
Stephen Carl, principal and head of equity trading at The Williams Capital Group, said Thursday's overall trading reflected a continuation of the bounce that first began on Tuesday, when the Fed lowered its federal funds rate by a steep 0.75 percentage point, or 75 basis points, to 3.5 percent.
He said investors were also encouraged that the government's rebate plan, while not perfect, appeared to be progressing. Still, despite some investors' mostly upbeat mood, uncertainty remained. The market's about-face Wednesday, while certainly a relief for many investors, illustrated the fractiousness that has settled into Wall Street in recent months.
"We still have a long way to go in getting the economy on track," Carl said. "Whether we dip into a recession or not, a lot of things need to be fleshed out in the markets."
Bond prices fell as stocks rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.67 percent from 3.55 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices rose.
Light, sweet crude oil for March delivery rose $2.42 to settle at $89.30 a barrel on the New York Mercantile Exchange after the agreement on the economic stimulus plan. Traders wagered the plan to put money in consumers' pockets could increase demand for oil.
Some of Wall Street's most recent concerns relate to the downgrade from Security Capital and broader unease about the stability of bonds. However, investors also looked to New York state regulators in hopes they can hatch a plan to shore up the bond insurance industry. New York Insurance Superintendent Eric Dinallo said in a statement Thursday it likely will take time to draw up measures to help the industry.
After the Fitch downgrade, Security Capital fell $1.16, or 30.6 percent, to $2.63.
Beyond bond insurers, investors had concerns about the health of corporate profits. Online auctioneer eBay Inc. said late Wednesday its fourth-quarter earnings and revenue showed gains. While the results were stronger than Wall Street had expected, investors were concerned by the company's first-quarter forecast, which fell short of expectations. The stock fell $1.76, or 6.1 percent, to $27.18.
Ford Motor Co. reported it lost $2.7 billion in the fourth quarter as weakness in North America offset gains in markets elsewhere; the loss was narrower than the $5.6 billion seen a year earlier, however. Excluding special items, Ford's results fell just short of Wall Street's target. Ford slipped 4 cents to $6.26.
The Russell 2000 index of smaller companies dipped 0.71, or 0.10 percent, to 692.72.Overseas, Japan's Nikkei stock average closed up 2.06 percent and Hong Kong's Hang Seng index fell 2.29 percent. Britain's FTSE 100 finished ahead by 4.75 percent, Germany's DAX index surged 5.93 percent, and France's CAC-40 jumped 6.01 percent.