Tuesday May 25, 2010
By Herbert Lash
NEW YORK, May 25 (Reuters) – U.S. stocks and the euro pared deep losses to end mostly flat on Tuesday as investors had second thoughts that a festering euro zone banking crisis will spread worldwide and strangle a reviving economy.
A late-day rally pulled the benchmark S&P 500 into positive territory minutes before the closing bell and wiped out most of the session’s losses for the Dow, which closed above the key barrier of 10,000.
U.S. Treasuries gave up most of their gains as equities rebounded from a broad sell-off and the euro staged a rebound from multi-year lows. Earlier, major stock indexes from Asia to Europe closed sharply lower and Wall Street fell more than 3 percent.
“It’s a selling climax. This has all the looks to me of a capitulation, this being the bottom,” said Keith Springer, president of Springer Financial Advisors in Sacramento, California.
He said investors had overreacted to fears that a European banking crisis could worsen and fester like the U.S. subprime mortgage crisis that sparked the global recession.
“We know about the banking crisis. Too many people are assuming it is going to turn into something different and be a contagion, and it’s not going to be a contagion,” Springer said.
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