Stocks bounce higher as bond woes ease

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The Standard & Poor's 500 index, the market measure most closely followed by professional traders, lost 6.1 percent for the month, its biggest January drop since 1990, when it fell 6.88 percent. Meanwhile the Dow Jones industrials rose more than 200 points Thursday but still suffered their worst January in eight years.

The day's trading emerged as a microcosm of the entire month, with the Dow first falling more than 190 points, and then by late afternoon, soaring more than 250. It capped a January that saw frequent triple-digit moves in the blue chips as investors alternately anguished about the fallout from the housing and mortgage crisis and celebrated any news that indicated the damage might limited.

Still, the market ended the month with heavy losses, evidence of how dejected investors have become. The Fed's 1.25 percentage points in interest rate cuts, designed to stave off a recession, ultimately gave Wall Street some reassurance that the economy might soon show signs of recovery — although the market still gyrated after the latest 0.50 percentage point cut on Wednesday.

Bond insurer MBIA Inc. also mollified Wall Street Thursday when its chief executive, Gary Dunton, told investors he is confident the company can retain its crucial AAA credit rating and that MBIA will still be able to raise fresh capital.

The notion that bond insurers could perhaps avoid being felled by a rush of claims over swaths of bad debt offered solace for investors who have for months worried about the fallout from a sharp pullback in the housing market and the resulting souring mortgage debt.

"Today is really more of a relief rally because the Fed did what the Street wanted. They did what was expected of them and the MBIA news relieved the fears of some investors," said Ryan Detrick, strategist at Schaeffer's Investment Research in Cincinnati. "For once there's actually maybe some calm coming into Wall Street."

The Dow rose 207.53, or 1.67 percent, to 12,650.36.

For the month, the Dow lost 4.63 percent — its worst January since losing 4.84 percent at the start of 2000.

Broader stock indicators also jumped Thursday. The S&P 500 index rose 22.74, or 1.68 percent, to 1,378.55, and the Nasdaq composite index rose 40.86, or 1.74 percent, to 2,389.86.

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