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Wall Street's wild week ends with another gain

By Bloomberg News

LAST UPDATED: 10:20 a.m. HST, Aug 12, 2011


U.S. stocks rose today, extending the biggest two-day advance for benchmark indexes since March 2009, as the largest increase in American retail sales in four months tempered concern that economic growth is slowing.

The Dow Jones industrial average increased 125.71 points, or 1.1 percent, to close at 11,269.02. The S&P 500 added 0.5 percent to 1,178.80 at 4 p.m. in New York, rising 5.2 percent in two days. The benchmark gauge for American equities fell 1.7 percent this week. The Nasdaq index rose 15.30 points, or 0.6 percent, to close at 2,507.98.

A gauge of retailers in the Standard & Poor's 500 Index climbed 1.5 percent, as 26 of its 30 stocks advanced, after the Commerce Department reported a 0.5 percent increase in retail sales. Caterpillar Inc. and 3M Co. added at least 1.6 percent, pacing gains among companies most-tied to the economy. Hewlett- Packard Co. advanced 4.1 percent after Jefferies Group Inc. raised its recommendation for the shares.

"The retail sales report was good," Barry Knapp, the New York-based head of U.S. equity strategy at Barclays Plc, said in a telephone interview. "The first step is a stabilization of the macro outlook in the U.S. Once you remove the uncertainties, it allows for capital market stabilization. Stocks are exceptionally cheap and this is a buying opportunity."

The S&P 500 was down 14 percent from a three-year high at the end of April as of yesterday, after plunging as much as 18 percent through Aug. 8. About $2.3 trillion was erased from U.S. equity values in the last three weeks as Europe's debt crisis, signs the economy is slowing and S&P's downgrade of the government's AAA credit rating left the benchmark gauge for U.S. shares within 11 points of a bear market.

The swings in U.S. equities this week are unprecedented in the history of the American stock market, according to data compiled by Birinyi Associates Inc., Bloomberg and Howard Silverblatt, senior index analyst at S&P.

The S&P 500 plunged 6.7 percent on Monday, its biggest slump since December 2008, in the first trading session after the U.S. was stripped of its AAA credit rating at S&P. The index rebounded 4.7 percent the next day after the Federal Reserve said it will leave its benchmark interest rate at a record low through at least the middle of 2013. The gauge then fell 4.4 percent on Wednesday and rebounded 4.6 percent Thursday. Never before has the index reversed moves that large each day over four sessions, the data showed.

Both European shares and the Russell 2000 Index of small U.S. companies entered a bear market this week, falling at least 20 percent from their previous highs.

Stock futures extended gains before the open of regular trading as retail sales figures matched the median forecast of 81 economists surveyed by Bloomberg News and followed a 0.3 percent increase in June that was larger than previously estimated. Excluding auto sales, purchases rose more than projected.

"That's a very positive sign on retail sales," Darrell Cronk, the New York-based regional chief investment officer at Wells Fargo Private Bank, which oversees $210 billion. "Growth is slowing, but we cannot see it heading into a recession."

Global stocks rose, extending the Stoxx Europe 600 Index's rally from a two-year low, as France, Spain, Italy and Belgium imposed short-selling bans. Regulators imposed bans to stabilize markets after Societe Generale SA dropped to its lowest price since March 2009 on Aug. 10. A gauge of European banks increased 4.5 percent, for its second day of gains.

"It may generate a positive short-term reaction in the stock market as they are clearly targeting the short-selling of the banks," Michael Holland, chairman and founder of New York- based Holland & Co., said in a telephone interview. His firm oversees more than $4 billion.

Financial stocks had the biggest decline in the S&P 500 within 10 industries, falling 1.2 percent after gaining 2.9 percent earlier. Morgan Stanley retreated 7.3 percent to $16.89 after climbing 3.7 percent earlier. JPMorgan Chase & Co. decreased 2.1 percent to $35.91. Bank of America Corp. sank 0.8 percent to $7.19 today, losing 12 percent for the week.

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