Financials stocks steered a broad market comeback Wednesday after Tuesday’s rout that had the sector matching its worst day ever and the Dow Jones industrial average tallying its worst Inaugural Day performance in its history.
Some analysts see silver linings in President Barack Obama’s economic-stimulus plans, saying the new administration’s proposals are like those in play in March 1933, when Franklin Delano Roosevelt took office at the height of the Great Depression.
"The most significant piece of legislation in the next few weeks will be the fiscal stimulus program," said Jeffrey Kleintop, chief market strategist at LPL Financial. "It may bolster confidence in the economy and markets or it may fall short and disappoint the market by not being put to work quickly enough."
During the first 100 days of FDR’s term, the stock market climbed about 80 percent.
"Obama received a rough welcome from the markets [Tuesday] despite the excitement and optimism surrounding the inauguration," said Bill Stone, chief investment strategist at PNC Wealth Management.
"Those hoping for the 15 percent gain that welcomed [FDR] in 1933 were certainly disappointed," he said.
"But the weakness likely has less to do with the president than with the continued uncertainty around two major issues: economic weakness and the financial sector."
That uncertainty was evident Wednesday, with the Dow Jones industrial average scaling back an early triple-digit rise to briefly dip into negative territory before resuming its course higher, closing at 8,228.10, up 279.01 points, or 3.51 percent.
"Right now we’re waiting to hear if Tim Geithner is approved" as Treasury secretary, said Marc Groz, founder and chief investment officer of Topos Llc., on Wednesday. "If he isn’t confirmed, then we’re back into 'Who’s in charge here?’ Whatever people think of Geithner’s record and capabilities, he’s a known quantity. Collectively, the market does not want to have more uncertainty."
The S&P 500 gained 35.02 points, or 4.35 percent, to 840.24, with financials pacing gains among the index’s 10 industry groups.
Bank of America Corp. (ticker: BAC) rose 31 percent on news that its executives and directors had been buying shares.
"News that corporate insiders are buying shares during the recent decline is a sign that they have confidence in the bank despite the recent turmoil," said Frederic Ruffy, options strategist at WhatsTrading.com.
The sector fell about 17 percent Tuesday, in line with its decline Dec. 1.
The Nasdaq composite gained 66.21 points, or 4.60 percent, to 1,507.07.
"The market is digesting and assessing the government’s intrusions into the private market, and until we get some further clarity on the treasury secretary situation as well as some finality on bank nationalizations, or lack thereof, I would expect further lateral movements," said Dan Greenhaus, equity strategy group at Miller Tabak & Co.
The blue-chip index shed 332.13 points Tuesday, or 4.01 percent; its second-worst Inauguration Day decline came Nov. 22, 1963, when the Dow lost 2.89 percent as Lyndon B. Johnson was sworn in after John F. Kennedy’s assassination.
Oil prices jump
Oil prices surged more than 12 percent Wednesday as the Wall Street rebound overshadowed a pending government crude report expected to show that U.S. inventories continue to swell.
The near-month contract for light, sweet crude rose $4.81 to settle at $43.55 a barrel in New York.
