he Dow opened lower, hit its intraday trough in the first half-hour of trading, and built a fairly steady rally thereafter. That pattern was similar to Tuesday's action and suggested increased buying by mutual funds and other institutions looking to put cash to work before they have to mail out annual statements to investors, traders said.
"It looks like this is going to be a trend you can ride through the end of the year," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "The whole thing has been confounding to an investing base that entered September with a fair amount of trepidation."
Conventional wisdom on Wall Street is that small investors tend to trade around the open and big players tend to be more active toward day's end, for a number of reasons. Many professional money managers are required by their charters to price their funds' shares for clients at day end, so they prefer to buy individual stocks toward the close as well.
Firms also try to minimize the market impact that their own trades have on shares that they want to hold. Having a large pool of fellow deep-pocketed buyers and sellers tends to help toward that goal.
The Nasdaq Composite Index gained 30.51 points, or 1.5%, to 2133.15.
The S&P 500 rose 16.13 points, or 1.5%, to 1068.76. Its financial sector rose 3.5% and its energy sector climbed 2.5%. Materials stocks climbed 1.4% as a continued rise in gold futures spurred interest in mining stocks.
September, often a tough month for stocks, has so far bucked its historical trend amid growing hopes for a rebound in the global economy. The Dow is up 3.1% for the month to date. The S&P 500 is up 4.7% and the Nasdaq is up 6.2%.
Doreen M. Mogavero, president of the New York floor brokerage Mogavero, Lee & Co., said that trading has been marked by continued improvement in sentiment among professional traders and a marked absence of short sellers, many of whom have dabbled in bullish bets or stopped trading altogether after taking a drubbing this year.
According to data from Treflie Capital Management, which tracks shortselling activity, the average short portfolio has fallen 27.5% in 2009, including a 3.4% decline in August. That's the worst performance through August since 1987, when the firm began collecting data.
Despite the market's recent gains, however, Ms. Mogavero said the rally still seems "fragile."
"This is not a market that I would say, as a blanket statement, everyone should be in," said Ms. Mogavero. "You have to look at it as a real personal issue. Are you prepared to enter and possibly lose money?"
In the latest round of encouraging economic news on Wednesday, the Federal Reserve said industrial production jumped 0.8% in August as factories boosted production of cars, machinery, food products, clothing and other goods. In a separate report, the consumer-price index climbed 0.4% in August, the Labor Department said, in line with the expectations of economists.
Budding hopes for an economic recovery have also helped commodity prices in recent days, with metals in particular gaining strength. Spot gold prices jumped $13.90 a troy ounce, or 1.38%, to settle at $1018.90 in Comex trading.
Weakness in the dollar has aided gold's jump. Wednesday was no different, as the dollar hit a 12-month low against the euro and a seven-month low against the yen.
Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams, noted that stock-trading volume was strong, with recent composite volume in the New York Stock Exchange reaching five billion shares, compared to a full-day average of about six billion shares this year.
"Everybody's back from vacation, so there's a lot more volume and there's just a lot more buyers than sellers out there," Mr. Rovelli said.
Wednesday 16 September 2009
Banks, GE Lead Stocks Up
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