The stock market rebounded Tuesday from the previous day’s huge decline, with the Dow Jones industrial average rising 270 points after fluctuating sharply.
The results weren’t enough to calm investors tired after huge swings in the market the past few months — including the nearly 680-point drop in the Dow on Monday. The blue chips were up more than 260 points Tuesday afternoon, then dipped to a loss before swinging higher again. Analysts said the volatility shows how bear markets operate, and warned that kind of trading pattern isn’t expected to change soon.
“I don’t know where the bottom to all this is,” said Alexander Paris, economist and market analyst for Chicago-based Barrington Research. “In these kinds of markets, all you have to do is get enough confidence to hold your nose and ignore the bad news to send the market higher.”
The market remains uncertain about what might lie ahead, from how long the recession might last to more troubles in the financial sector. Wall Street this week is uneasy about coming reports, primarily Friday’s jobs report, which is among the most important economic reading of the month.
The Dow rose 3.3 percent, to 8419.09, making back more than a third of Monday’s plunge. The Standard & Poor’s 500 index rose 32.60, or 4 percent, to 848.81, while the Nasdaq composite index gained 51.73, or 3.7 percent, to 1449.80.
The market’s rise picks up from a five-day rally that was snapped Monday. The streak for the Dow and the S&P 500 was the longest since July 2007, and the biggest point and percentage gain since the Great Depression.
Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research, said there might be too much optimism in the market. “There’s too much talk of valuations, people jumping in on the bullish side after a bounce,” he said. “And that’s not how bottoms form, and that’s not going to take this market continually higher.”
