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Brazil bailout { August 8 2002 } Original Source Link: (May no longer be active)
http://www.washingtonpost.com/wp-dyn/articles/A59743-2002Aug8.htmlhttp://www.washingtonpost.com/wp-dyn/articles/A59743-2002Aug8.html
Stocks Rise as Brazil Bailout Helps Banks
By Chelsea Emery
Reuters
Thursday, August 8, 2002; 4:08 PM
NEW YORK (Reuters) - Stocks jumped for a third session of gains on Thursday, as a $30 billion bailout for debt-ridden Brazil boosted banking giants like Citigroup Inc. and J.P. Morgan Chase & Co. .
Stocks zig-zagged during early trading, but then climbed steadily in early afternoon as investors jumped in on fears they might lose a chance to buy stocks at bargain prices. The market has gotten a boost this week from hopes the U.S. Federal Reserve may cut interest rates sometime this year after a string of tepid reports showed the economic recovery may have hit a roadblock.
"People are sensing we're close to a bottom after having had some sharp rallies," said Matt Holscher, head of Nasdaq trading for WR Hambrecht & Co. "The first phase was short-covering. Now people are dipping their toes in the water and thinking it might be a decent time to get involved."
At the close, the Dow Jones industrial average had risen 255 points, or 3 percent, to 8,712, after rising more than one percent near the open, then dipping into negative ground. The blue-chip gauge climbed more than 5 percent over the previous two days.
The Nasdaq gained 35 points, or 2.7 percent, to 1,316 after wobbling between gains and losses earlier. The technology-loaded index rallied more than 6 percent over the past two days.
The broad Standard & Poor's 500 Index was up 28 points, or 3.2 percent, at 905.
Winners beat losers by a ratio of 3 to 2 on the New York Stock Exchange, but declining stocks narrowly edged advancers on Nasdaq.
Citigroup and J.P. Morgan rose more than 6 percent as banks that had lent money to Brazil got a lift after the International Monetary Fund's bailout for South America's biggest economy. The lifeline helped ease fears Brazil might default on its $250 billion public debt.
Citigroup climbed $1.93 to $33.45 and J.P. Morgan tacked on $1.76 to $25.80.
Shares of Brazilian companies that are traded in the United States soared. Brasil Telecom jumped $4.36, or 16 percent, to $30.91, making it the biggest percentage gainer on the NYSE.
Retailers were lower, however, after some reported disappointing sales results at stores open at least a year. The S&P retailing index fell 3.58 percent.
Discount retailer Wal-Mart Stores Inc. dipped 40 cents to $47.98. The Dow component reported same-store sales rose 4.5 percent in July, slightly less than its prior estimate.
Home Depot Inc., the world's largest home improvement retailer, sank $1.71 to $26.55, a drop of more than 6 percent that weighed on the Dow.
Consumer electronics retailer Best Buy Co. Inc. tumbled $11.55, or almost 38 percent, to $19.25 after slashing its quarterly outlook for the second time in two months. The company, which ranked as the biggest loser on the New York Stock Exchange, blamed declining consumer confidence and flat same-store sales.
Univision Communications Inc., the largest Spanish-language media company in the United States, sank $2.87, or more than 13 percent, to $19.03. The company posted lower quarterly earnings and warned of slower growth in the second half of the year.
Microsoft Corp. gained 98 cents to $48.07. The software leader has agreed to settle charges by the U.S. Federal Trade Commission that its Passport Internet identification service violates users' privacy, a source familiar with the matter said.
The latest economic data lifted some of the gloom over Wall Street. U.S. producer prices declined in July, the Labor Department said in a report that leaves Federal Reserve policymakers with few inflation worries when they meet next week. Hopes have mounted that the central bank will cut interest rates -- already at 40-year lows after 11 cuts last year -- to prop up the economy.
"The Fed has nothing to worry about on the inflation front; whether they will do anything is a question mark," said Paul Cherney, a market analyst at S&P Marketscope. "Markets right now are in a positive mode."
Fewer Americans than expected signed up for state unemployment benefits last week, the government said in another report Thursday that showed a slowly improving U.S. labor market.
© 2002 Reuters
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