Stocks post biggest 2-week gain since November

[June 19, 2010]  NEW YORK (AP) -- Here's something for investors beaten down by the market's sharp declines this spring: The Dow Jones industrial average just had its best two weeks since November.

The Dow's gain of 16 points on Friday was relatively modest, but it capped a surge of 5.2 percent over the past two weeks that puts the average nearly halfway back to the high for the year that it reached on April 26.

Stocks had a longer winning streak earlier this year, an eight-week stretch that ended in late April, but those gains were more gradual. Then a sharp drop in May and early June brought the Dow down as much as 12.4 percent below its 2010 high, a decline that market analysts call a "correction."

The debate now is focusing on whether that correction phase is over. A correction is generally considered a drop of 10-20 percent from a recent peak. The Dow has risen back 6.5 percent from its lowest close of the year on June 7, but it's still down 6.7 percent from its 2010 high.

"I don't know that we're totally through the correction," said Stu Schweitzer, global markets strategist at JPMorgan's Private Bank in New York. "I do expect markets to remain quite volatile all through the rest of this year, but I still expect that we're going to end the year higher."

Minerals companies led other shares higher after gold settled at another record high. Barrick Gold Corp. jumped 3.5 percent, while Newmont Mining Corp. rose 2.6 percent.

Corporate news also brought out buyers. CVS Caremark Corp. rose 1.9 percent and Walgreen Co. rose 2.8 percent after the two companies settled a dispute over pharmacy prescriptions that had threatened to hurt profits. Dow component Caterpillar Inc. gained 1.4 percent after reporting sharply higher sales.

The Dow rose 16.47, or 0.2 percent, to close at 10,450.64. The broader Standard & Poor's 500 index rose 1.47, or 0.1 percent, to 1,117.51. The Nasdaq composite index edged up 2.64, or 0.1 percent, to 2,309.80.

All three indicators posted solid gains for the week. The Dow is up 2.3 percent, the S&P 500 2.4 percent and the Nasdaq 3 percent.

The Dow posted its second consecutive weekly gain of more than 2 percent. Before that, the Dow had been down for three weeks. The last time the Dow had a two-week stretch of gains that strong was in November 2009.

Advancing stocks narrowly outpaced those that fell on the New York Stock Exchange, where consolidated volume came to 4.9 billion shares, versus 4.6 billion the day before. Volume was heavier because of the simultaneous expiration of four kinds of futures and options contracts, which occurs once every quarter.

Trading was relatively quiet considering the options and futures expirations, which can often bring volatility as traders adjust their portfolios. The week that follows the June expiration is often a losing one for investors. The Dow has posted a loss during that week for the past 11 years, according to the Stock Trader's Almanac.

Bond prices slipped, pushing interest rates higher. The yield on the benchmark 10-year Treasury note rose to 3.23 percent from 3.20 percent late Thursday.

The dollar edged lower against the British pound and Japanese yen, while the euro edged down versus the dollar. The euro has regained strength over the past week amid encouraging signs in Europe's efforts to control its debt crisis. Spain had successful bond sales this week, and European leaders pledged to disclose the results of stress tests on banks.

Crude oil rose 39 cents to settle at $77.18 per barrel on the New York Mercantile Exchange.

Randy Frederick, director of trading and derivatives at Charles Schwab, said the market's bounce from its recent lows has come too quickly. He said professional traders are building up positions in investments that would cushion their losses if the market fell again.

"Not that we're going into this big ugly bear market but to go back down to the lows that we were at just a few weeks ago, I think, seems very possible based on what I see," Frederick said. "I see a reason to be a little cautious right now."

The coming week brings readings on home sales and consumer sentiment. The Federal Reserve also will meet on interest rates.

Gold settled up $1,258.30 an ounce, a gain of $9.60. Barrick Gold rose $1.56, or 3.5 percent, to $46.38, and Newmont Mining climbed $1.57, or 2.6 percent, to $61.25.

CVS rose 59 cents to $32.43, while Walgreen gained 82 cents to $30.09. Caterpillar gained 90 cents to close at $65.85.

The Russell 2000 index of smaller companies rose 1.07, or 0.2 percent, to 666.92.

[Associated Press; By TIM PARADIS and SETH SUTEL]

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