[FINANCIAL CRISES: From the Depression until today]
[SURVIVAL GUIDE: Weathering the financial crisis]
Was it the government's bailout beginning to have an effect? The credit markets finally beginning to loosen up? Investors looking for a bottom in stocks?
Wall Street seemed sure of this much: The whipsawing will continue. So buckle up.
"You're not going to see 50-point ranges, you're going to see two-three-four hundred point ranges," said Woody Dorsey, president of Market Semiotics, a financial forecasting firm in Castleton, Vt.
At any other time in the history of the stock markets, a day like Thursday would be enough to draw a double take. But in these extraordinary times, it was the second-calmest day of the week.
The Dow set a record on Monday with a 936-point gain. After a 77-point loss on Tuesday, a relative breather, sellers stampeded on Wednesday and drove the Dow back down 733.
On Thursday, heavy selling in the morning took the Dow close to 8,200, but stocks rallied into the lunch hour and picked up steam in the afternoon. The average finished at 8,979.26.
The gain of 401 points marked the 21st trading session out of the past 24 in which the Dow has finished with a triple-digit gain or loss, an unprecedented run of volatility.
Thanks to a massive cash infusion by European central banks and the U.S. Treasury, interest rates on overnight, one-week and two-week debt began to shrink, and lending loosened up just a bit.
"It's a start, but we've still got a long way to go," said Kim Rupert, fixed income analyst at research firm Action Economics LLC.
Loan auctions by the European Central Bank, the Bank of England and the Swiss National Bank, as well as the Federal Reserve's plan to buy about $250 billion in bank stocks, seemed to restore some confidence to credit markets.
"Credit markets are thawing," said Jack Ablin, chief investment officer at Harris Private Bank. "The fear I had that our capital market system would grind to a halt -- I don't have that concern. I can sleep all night now."
The economic picture did not look much rosier. Prices stayed flat overall in September, the government reported -- meaning inflation is in check, at least for now. Gas, clothes and new cars got cheaper, and food, medical care and other items got more expensive.
In an indicator that more price declines might follow, crude oil fell $3.14 a barrel to $71.40, about where it was a year ago and a level unimaginable over the summer, when gasoline soared past $4 a gallon.
"Inflation has peaked," said Ian Shepherdson, chief U.S. economist at High Frequency Economics, predicting huge declines in inflation readings.
But the paychecks Americans use to pay for all of it are shrinking. Weekly wages dropped by 2.5 percent in September from a year ago.
In a reflection of the trouble in the banking industry, Citigroup said it lost $2.8 billion in the third quarter, compared with a profit of $2.2 billion a year ago. The deficit for the July-to-September period brings Citi's total losses over the past year to more than $20 billion. The bank said it had cut 11,000 jobs in the third quarter, bringing its job cuts for the year to 23,000.
General Motors Corp. said it would lay off 1,600 workers at three factories indefinitely over the next few months.
The U.S. economy is suffering from a litany of problems: falling wages, weak consumer spending, tight credit, slumping home prices and rising job losses. While the number of new people signing up for unemployment benefits last week dropped, new claims still totaled 461,000 -- a figure associated with deep troubles in employment conditions.
Still, on Wall Street, other major averages showed gains similar to the Dow's 4.7 percent. The Standard & Poor's 500 gained more than 4 percent, and the Nasdaq composite index added 5.5 percent.
But one day's climb won't do much to repair investors' portfolios. Since Oct. 9, 2007, when the Dow topped 14,000, investors have lost $8.3 trillion from pension funds, college savings plans, 401(k)s and other investments.
Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke have expressed confidence that the government's radical efforts to stabilize the financial system and induce banks to lend again will eventually help the economy. They have also warned that the economy won't turn around quickly.
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