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Indexes edge lower after an early stock market rally fades; gold prices slump
NEW YORK (AP) ' An early stock market rally faded Wednesday, leaving indexes with small losses in early afternoon trading. The price of gold slumped 4 percent as investors became less fearful.
A sharp increase in orders for long-lasting goods in July eased fears that the U.S. was headed for another recession. Companies placed more orders for aircraft, automobiles and other durable goods in July. Orders rose 4 percent, the biggest increase since March.
The Dow Jones industrial average was down 37 points, or 0.3 percent, at 11,140, erasing a morning jump of 115 points. It gained 322 points the day before.
The stock market often makes big swings in late August with fewer traders at their desks, said Dan Greenhaus, chief global strategist at the brokerage BTIG. Lower trading volumes often make for a more volatile market.
"It's kind of crazy. I blinked and in 15 minutes the market had turned," Greenhaus said. "But in the last two weeks of August, wild swings like this are not out of the ordinary."
Two days after trading above $1,900 an ounce for the first time, gold fell $72 to $1,788 as investors became less skittish. Gold has risen 8 percent since Aug. 5, when the stock market entered a two-week period of heavy turbulence.
The S&P 500 index fell 4 points, or 0.4 percent, to 1,158. It gained 38 points Tuesday, also its best day since Aug. 11. The Nasdaq fell 21 points, or 0.9 percent, to 2,424.
Bank of America Corp. rose 8 percent, the most of any stock in the Dow average, after analysts said a four-day slide that erased 15 percent of the bank's value had been overdone. Toll Brothers rose 4 percent after the homebuilder reported quarterly income that trounced analysts' estimates.
Stocks have made huge moves this month after Europe's debt crisis flared up again and as signs emerged that the U.S. might slip back into recession. The Dow has moved by more than 300 points seven days in August. A 200-point jump early Monday dwindled to a 36-point gain by the close of trading.
Indexes jumped sharply Tuesday as investors brushed off a pair of weak economic reports and an earthquake that shook the East Coast. Even after Tuesday's rally, the Dow is down 8 percent in August. The S&P 500 index has lost 11 percent, putting it on track for its worst August since 1998.