Dow, S&P snap back after Spain scare, banks up

By IBTimes Staff Reporter | April 28 2010 1:56 PM

The Dow and the S&P 500 recovered after a sharp selloff on Wednesday, sparked by a credit downgrade of Spain, as investors scooped up beaten-down shares of financial companies.

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Investors were jittery and indexes volatile ahead of Federal Reserve comments at the end of a two-day policy meeting. The Fed's post-meeting statement is due about 2:15 p.m. (1815 GMT).

Standard & Poor's cut its key rating on Spain by one notch, citing a more protracted period of sluggish growth than previously expected. Worries about some euro zone nations' fiscal health have weighed on global markets for months.

But U.S. bank shares rose, lifting the S&P 500, with JPMorgan & Co up 2.3 percent to $43.37, while the KBW bank index <.BKX> added 1.3 percent. The financial sector rebounded after a steep selloff on Tuesday that followed rating downgrades of Portugal and Greece.

Earnings season stayed in high gear, with Dow Chemical Co up 5.2 percent to $31.64 after reporting a profit that beat expectations.

Fundamentals are pretty strong, earnings should continue to surprise to the upside and investors are catching their breath, realizing policymakers will ultimately do the right thing for Greece, said Paul Zemsky, head of asset allocation at ING in New York.

The Dow Jones industrial average <.DJI> gained 54.56 points, or 0.50 percent, to 11,046.55. The Standard & Poor's 500 Index <.SPX> rose 7.53 points, or 0.64 percent, to 1,191.24. The Nasdaq Composite Index <.IXIC> dropped 1.25 points, or 0.05 percent, to 2,470.22.

About seven stocks rose for every five that fell on the New York Stock Exchange, while on the Nasdaq seven stocks advanced for every six that fell.

International Monetary Fund Managing Director Dominique Strauss-Kahn estimated a Greek aid package at 100 billion to 120 billion euros ($133 billion to $160 billion), according to German officials. The news partly eased concern over sovereign debt problems, but Spain's downgrade revived worries of contagion.

Investors awaited comments from the Federal Reserve Open Market Committee, which is expected to hold interest rates near zero and repeat its vow of keeping rates very low for an extended period.

Comcast Corp , up 2 percent to $18.82, helped buoy the Nasdaq after the No. 1 U.S. cable operator posted slightly better than expected quarterly profit.

Apple Inc and Amazon.com Inc weighed Nasdaq, with Apple off 0.4 percent to $260.92 and Amazon down 1.5 percent to $139.88.

(Editing by Kenneth Barry)