Markets Rally at close
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Nov 13, 2008 03:36PM
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From GlobeInvsetorGold
This is the last paragraph of the article which I find inreresting
“The current one is bordering on 46 per cent, while the average rally one year after the bottom has been 42.5 per cent. Thus, following the losses since last October, it seems foolhardy to sell now.”
Markets rally at the close
STEVE LADURANTAYE
17:53 EST Thursday, Nov 13, 2008
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North American markets surged at the close Thursday, erasing morning losses as investors rushed back into stocks despite a rash of bad economic news.
“It's been an amazing day in that we've been all over the place,” said Michael Sprung, president of Sprung & Co. Investment Counsel in Toronto. “Maybe it's people covering positions, maybe bargain hunters looking to take advantage. It's hard to read anything into the day-to-day movements right now.”
The Dow Jones industrial average gained 6.67 per cent, or 552.59 points, to close at 8,835.25. The rally is all the more impressive when you consider it had broken below 8,000 earlier in the day, hitting an intraday low of 7,973.
The broader S&P 500 was up 6.92 per cent, or 58.99 points, to 911.29.
In Toronto, the S&P/TSX gained 4.82 per cent, or 430.21 points, to 9,352.78. It was as low as 8,596 earlier in the day.
“It's a very wild ride today, things are just gyrating all over the place,” said Andrew Pyle, a Peterborough, Ont.,-based wealth adviser for Scotia McLeod. “The bottom line is, two weeks ago people thought we were at a bottom. But now, we're seeing the type of volatility that would have scared the bejeebies out of people back in September. So it's very difficult for the markets to sustain rallies.”
The Toronto index was boosted by a 4 per cent jump in the price of oil, as OPEC announced it would meet to discuss the rapid slide in prices. U.S. crude recovered from a session low of $54.67 (U.S.), to hit $58.24 a barrel on the New York Mercantile Exchange. Spot gold also traded higher, gaining almost $9 to 720.90 an ounce.
“Investors are just grasping at things,” Mr. Pyle said. “This afternoon you've seen the pickup in oil give the markets a boost, but even as we speak they could head lower again.”
The day started on a bleak note, with the Organization for Economic Co-operation and Development reporting economic output would shrink by 1.4 per cent this quarter for its 30 member countries, and the contraction would continue through next year.
It's the first time since the group was founded in 1970 that it has forecast that all of its members' economies would fall back at the same time.
Jorgen Elmeskov, director of policy studies at the OECD, said a high degree of uncertainty surrounds the outlook because market conditions are still unsettled.
“Much depends on the depth and duration of the financial crisis, the main driver of the current recession,” he said. “The ongoing adjustment in housing markets still has a long way to go.”
Meanwhile, the number of newly laid-off workers seeking unemployment benefits in the United States hit a level not seen since the terrorist attacks in 2001. The U.S. Labour Department reported that jobless claims last week increased by 32,000 to a seasonally adjusted 516,000. Analysts had expected claims to increase by 484,000. Any number over 400,000 is considered to be a sign of a recession.
“[At] 517,000, it's just 1,000 short of the high reached during the 2001 recession and in the immediate aftermath of the terrorist attacks,” Goldman Sachs wrote in a note. “Apart from that and another anomalous week following the early 1990s recession, you have to go back to the early 1980s recessions to find a time when claims were consistently at or above the current level.”
Citigroup Inc.'s chief U.S. equity strategist Tobias Levkovich tried to inject some hope, pointing out that since 1929 the average bear market has seen a 36.5 per cent decline in the S&P 500.
“Bear markets are always horrible and investors feel like they will never end as a general sense of malaise sets in, but the history is quite revealing,” he said.
“The current one is bordering on 46 per cent, while the average rally one year after the bottom has been 42.5 per cent. Thus, following the losses since last October, it seems foolhardy to sell now.”