USA: Later turnaround by U.S. markets

Powerful last-minute rally led by financial shares on optimism that regulators may let two of the biggest U.S. mortgage funding companies play a bigger role in steadying the ailing industry The Dow industrials closed lower for a sixth day on Thursday (August 16) on fears that credit markets may break down and hurt the economy and profits, but a remarkable late-day surge almost brought them back into the black. The blue chips recovered 300 points in the last 45 minutes of the day, and the broader benchmark S&P 500 clawed back into positive territory to finish up on the strength of a rebound in beaten-down bank and brokerage stocks. Earlier, investor confidence had taken a blow from Countrywide Financial Corp. The biggest U.S. mortgage lender said it had to draw down an entire $11.5 billion bank credit line after it was essentially shut out of other credit markets. For the first time in the month-long slump, the companies bearing the brunt of the losses were those most sensitive to a potential downturn in economy, such as oil company Exxon Mobil and industrial conglomerate Caterpillar. "You've just got a broad, a broad sense of doom, that we don't know where the bottom is," explained Art Hogan, Chief Market Analyst, Jefferies and Company, adding, "But this, this week has been the week of and today has been a day of just, everybody throwing in a towel." Hogan said that what the market is currently experiencing is a typical correction in a bull market, though there is concern that the credit crunch could have a negative impact on consumer spending. At the close, the Standard & Poor's 500 Index was up 4.55 points, or 0.32 percent, to close unofficially at 1,411.25. The Nasdaq Composite Index was down 7.76 points, or 0.32 percent, to finish unofficially at 2,451.07.

ITN Source | August 17, 2007

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