Seesaw ride finally lifts stocks
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If Monday's 635-point drop was Wall Street's version of Kennywood's Pitfall, Tuesday was The Phantom's Revenge.
Stocks got off to a roaring start, cooled off and plunged into negative territory after a statement from the Federal Reserve before exploding back into positive territory and eclipsing earlier gains.
The Dow Jones Industrials closed at 11,239.77, up 429.92 or 4 percent. The bellwether index had traded as low as 10,604.07 -- 205 points lower than Monday's close -- throughout the day. The S&P 500, a broader market index, advanced 53.07, or 5 percent, to finish at 1,172.53. Throughout Tuesday, the index had fallen as much as 1.6 percent below its closing price Monday.
The biggest winner among local stocks was Michael Baker. Buoyed by better than expected quarterly profits and a second round of cost-cutting, investors bid up shares of the Moon engineering firm 28 percent. Baker closed $22.15, up $4.85. ESB Financial rose 21 percent, finishing at $13.63, up $2.38. Universal Stainless & Alloy Products, one of Monday's biggest losers, rose 14 percent Tuesday, closing at $37.19, up $4.44.
AmeriServ Financial suffered the biggest decline, shedding 27 cents, or 15 percent, to close at $1.57.
Stocks began the day with a sharp rally as investors found plenty of buying opportunities after Monday's carnage.
"When you get volatile markets like this, it's like shooting fish in a barrel," said Greg Melvin, chief investment officer of C.S. McKee, Downtown.
The hardest headline for investors to digest Tuesday was a statement from the Federal Reserve saying it intended to keep interest rates low until mid-2013. Previously, the Fed had said only that it would keep rates low for "an extended period." Most analysts had translated that to mean until mid-2012.
"They just upped the extended warranty for another year," said PNC Financial Services Group chief economist Stuart Hoffman. "The Fed is trying to reassure markets that they're going to help in any way they can."
First Published August 10, 2011 12:00 am
