Dramatic Surge in American Stock Prices in the Last Hour of Trading

Sharply corrected prices of financial stocks attracted significant purchases from investors on Wall Street towards the end of trading on Thursday, resulting in a slight gain for the S&P index.

Its value rose by 0.3 percent, to 1,411 points. The New York Dow Jones index, however, weakened by 0.12 percent, to 12,846 points. The technology Nasdaq fell by 0.3 percent, to 2,451 points. Speculation regarding a possible interest rate cut in the U.S. dominated the market in the last hour of trading, enabling a reversal in stock price movements.

The biggest gainers were financial stocks, including Citigroup and JPMorgan Chase. Earlier in the trading session, negative investor sentiment was deepened by the data showing that the growth of new home sales in July in the U.S. was the slowest in over 10 years, and that industrial activity in the Mid-Atlantic region stagnated in August. With record trading volume and the largest price fluctuations in the last five years, stocks quickly recovered sharp losses recorded during the morning and early afternoon towards the end of trading. Thus, the Dow Jones index regained 300 points in the last 45 minutes of trading, ultimately ending with a loss of only 16 points.

“I think many financial stocks are oversold. Some investors are starting to take a long-term stance and are looking for sharply corrected stocks,” said Michael Sheldon, a market strategist at Spence Clarke. The brokerage firm Bear Stearns, whose losses in the mortgage market shook the markets a few weeks ago, recorded a 13 percent recovery in its stock price, marking their largest percentage daily jump in the last nine years. The reason is speculation that it is receiving necessary capital from an external investor. Furthermore, the Fed injected an additional $17 billion in cash into the banking system on Thursday, stating that it is ready to inject more money if necessary, somewhat calming investors.

On European exchanges, stock prices recorded the largest percentage loss in the last four years, with financial company stocks being the most affected. The London FTSE index plummeted by 4.1 percent to 5,859 points, the lowest level in the last 11 months. The London FTSE index weakened by 2.4 percent to 7,270 points. (Hina)