Late Stock Rally On Goldman Settlement Expectation
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Stocks had a late-day turnaround Thursday on expectations that Goldman Sachs is settling the government’s civil fraud charges. As word spread that the Securities and Exchange Commission had scheduled a late-afternoon announcement, investors began buying on the belief that the government and Goldman Sachs Group Inc. had settled the charges that grew out of the sale of securities based on risky mortgages.
Anticipation of a settlement, which would remove uncertainty that has hovered around Goldman since the charges were announced April 16, was enough to make traders temporarily set aside their concerns about the economy. A series of disappointing economic reports had sent the Dow Jones industrials down nearly 100 points in late trading. In the last half hour, the Dow scrambled back to a loss of just 7.
Goldman was trading at about $140 a share when word of the announcement came. The stock then soared to close at $145.22, up $6.16.
“There would be a lot of relief if the Goldman Sachs issue were settled. It hangs over the investment banks and the financial community in general, said John Merrill, chief investment officer of Tanglewood Wealth Management in Houston.
More uncertainty was lifted from the market late in the day, when the Senate passed and sent to President Barack Obama the financial regulation bill.
The Dow fell 7.41, or 0.07 percent, to 10,359.31. The Standard & Poor’s 500 index rose 1.31, or 0.1 percent, to 1,096.48, while the Nasdaq composite index fell 0.76, or 0.03 percent, to 2,249.08.
Losing stocks were slightly ahead of gainers on the New York Stock Exchange, where volume came to 1.1 billion shares.
(Copyright 2010 by The Associated Press. All Rights Reserved.)