Stocks Give Up Gains after 4-Day Rally
March 16, 2009 - 4:02 PMWall Street broke a four-day advance Monday as a rally in financial stocks fizzled and dragged the market lower. Analysts said the pullback didn't necessarily signal that traders were reconsidering their newfound optimism about financial stocks, a main driver behind week's advance.
"This is healthy," said Dave Rovelli, managing director of trading at brokerage Canaccord Adams in New York. "The best thing for this market is that we don't go up aggressively. A steady rise of a few up days then a down day would be a lot better than 1,000 points up."
Stocks had been higher for much of the session as investors snapped up hard-hit financial shares. Stocks started the day higher after comments from Federal Reserve Chairman Ben Bernanke and news from a British bank eased some worries about the overall economy and the prospects for financial companies struggling with bad debt.
Bernanke said Sunday that the recession would probably end this year if the government's efforts to revive the banking industry succeed. In an interview with CBS' "60 Minutes," Bernanke said fixing the economy will require getting banks to lend more freely and financial markets to work more normally again.
Britain's Barclays PLC reassured investors after saying it has been performing well in 2009. Last week, both Citigroup and Bank of America Corp., reported that they had made money in January and February. The good news from banks kicked off the market's turn higher last Tuesday.
Market analysts said the pullback was in keeping with how the rally began last Tuesday.
"We're still under the assumption that it's still a bear market rally, given the heavy, intensive selling that took place a week ago," said Steven Goldman, chief market strategist at Weeden & Co. After the market's recent runup, he said, "it should be getting bumpier here as we move forward."
According to preliminary calculations, the Dow slipped 7.01, or 0.1 percent, to 7,216.97. The blue chips rose as much as 169 points during the session.
The Standard & Poor's 500 index fell 2.66, or 0.4 percent, to 753.89, while the tech-heavy Nasdaq composite index fell 27.48, or 1.9 percent, to 1,404.02.
More stocks rose than fell even as the major indicators lost ground. Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to a moderate 1.9 billion shares.
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