Bargain-hunting drives slight gains for US stocks

Published on NewsOK Modified: February 4, 2014 at 4:19 pm •  Published: February 4, 2014
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Investors went hunting for bargains a day after U.S. stocks racked up the biggest losses in more than seven months.

The buying helped lift major stock indexes out of the red on Tuesday. Prices of U.S. government bonds fell.

The mini-rebound seemed fragile at times, with the market giving up some of its earlier gains by late afternoon.

Markets were coming off a 326-point drop in the Dow Jones industrial average on Monday, and the blue-chip index's worst January performance in five years prompted by disappointing news about U.S. manufacturing.

"It was the biggest hole we've seen for quite a bit, so it's not surprising to see a green day after a couple days of red," said Andres Garcia-Amaya, a global market strategist with J.P. Morgan Funds.

Portfolio managers seized on the aftermath of Monday's sell-off to buy, even as many stock watchers acknowledged that the market could still be in for a correction, or a drop of at least 10 percent.

"The one thing you never know is when the bottom is going to hit in a downturn," said Quincy Krosby, a market strategist with Prudential Financial. "So what you might do is at least begin the process of building your position."

Among the biggest gainers on the day were fashion retailer Michael Kors Holdings, water technology provider Xylem and the owner of Pizza Hut, KFC and Taco Bell restaurant chains.

Trading was relatively light for much of the day, picking up by late afternoon. But most of the active stocks were in the green.

All told, the Dow rose 72.44 points, or 0.5 percent, to close at 15,445.24 Tuesday. The Standard & Poor's 500 index climbed 13.31 points, or 0.8 percent, to 1,755.20. The Nasdaq composite gained 34.56 points, or 0.9 percent, to 4,031.52.

Even with Tuesday's gains, the Dow is down 6.8 percent this year, and the S&P 500 index is off 5 percent .

Investors are trying to gauge the strength of the U.S. economic recovery. They got some positive news on Tuesday, when the Commerce Department reported that orders to U.S. factories fell 1.5 percent in December, as aircraft orders plunged. That's the biggest drop since July, but it was less than anticipated.

On Monday, the Institute for Supply Management said its index of manufacturing activity fell to 51.3 in January, the lowest reading since May. That unnerved investors already worried about signs of a slowdown in the global economy.

Whether Tuesday's market uptick gains momentum or gives way to another sell-off may depend on what the government's latest jobs report says on Friday.

Employers added just 74,000 jobs in December, the fewest in three years and far below the average of 214,000 added in the previous four months. The consensus forecast for January calls for hiring to rebound to 170,000, according to FactSet.

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