Industrials, utilities pull stocks higher

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September 14, 2009

Anonymous The Salem News Mon Sep 14, 2009, 04:47 PM EDT

NEW YORK (AP) — Stocks clawed back from early losses to post moderate gains as traders funneled money into utilities and industrial stocks.

Major market indexes ended at their highest levels in nearly a year.

The market sold off at the open following a drop in overseas markets on worries that a trade war would erupt between the U.S. and China. But stocks began to recover from an early dip that sent the Dow Jones industrial average down 100 points as investors seized on the dip to inject new money into the market. The Dow ended with a gain of 21 points.

Utility AES Corp. helped pull the market higher after The Wall Street Journal reported that China's investment arm is interested in buying a stake in the company.

Analysts said the day's modest gains were impressive after a strong run last week and as a continuation of a powerful six-month rally that has lifted the Standard & Poor's 500 index 55.1 percent.

"We open lower and buyers seem to chip away, and we climb higher," he said. "It's somewhat healthy that we're rallying this way — slowly."

According to preliminary calculations, the Dow rose 21.39, or 0.2 percent, to 9,626.80. It had been down about 109 points at its low. The broader Standard & Poor's 500 index rose 6.61, or 0.6 percent, to 1,049.34, an 11-month high. The Nasdaq composite index rose 10.88, or 0.5 percent, to 2,091.78.

The trading came in sharp contrast to the tumult of a year ago, when the collapse of Lehman Brothers Holdings Inc. sent the Dow Jones industrial average down 500 points in one day and jammed the credit markets that power the world's economies. The S&P 500 index is still down 16.2 percent from that time and 33 percent from its peak in October 2007.

Traders reacted coolly to a speech across the street from the New York Stock Exchange from President Barack Obama, who warned the financial industry against repeating the recklessness that led to collapse of Lehman Brothers.

Richard Ross, global technical strategist at Auerbach Grayson in New York, said the economy still face obstacles but that the market could extend its recovery because investors are far more optimistic than when stocks skidded to 12-year lows in early March.

"Questions remain but a lot of the uncertainty has largely been removed. That sort of dooms day scenario has been taken off the table," he said. "We're striking a much healthier balance between greed and fear."

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