Relatively solid gains for major averages at midday misrepresented what was a pretty wild morning, particularly for a mid-August Wednesday. As of 1:24 p.m. EDT, the Dow Jones Industrial Average was up 0.5%, to 8,917.84, vs. its earlier high of 8968.40 and low of 8798.89. Similarly, the S&P 500 was higher by 0.7%, to 944.07, after having traded as high as 947.39 and as low as 931.80. The Nasdaq Composite was up 1.5%, to 1397.16, vs. its earlier high of 1401.21 and low of 1378.09. Stock proxies bolted higher from the opening bell amid a downtick in oil prices, strength in the dollar and the first
guilty plea in the Enron saga. Strength in both AOL Time Warner ( AOL) and AT&T ( T) also aided stock proxies; AT&T agreed to sell its minority stake in Time Warner Entertainment for $3.6 billion in cash and stock, plus minority ownership in cable-television systems that AOL plans to take public next year. Comcast ( CMCSK), which is buying AT&T's cable business, will inherit the 21%-stake in Time Warner Cable. As Byzantine as the deal was and is, it was seen as a victory for AOL CEO Richard Parsons. It extricates the company from a long-running partnership with AT&T, gives AOL the ability to market its broadband service to AT&T and Comcast cable subscribers, and should simplify AOL's financial structure. Also weighing on shares were reports the international terminal of the Miami airport was evacuated and comments from Philadelphia Fed president Anthony Santomero, indicating rate cuts may not be forthcoming anytime soon. "The Fed's current monetary policy stance is appropriately supportive of the recovery process," Santomero said in a speech in Berks County, Pa. "At some point, prudence will dictate that we begin moving monetary policy back toward a more neutral stance." Santomero, one of several Fed governors speaking this week, did express confidence that "the tools we have available will be effective in continuing this recovery and leading us to potential growth," and that the Fed has room to lower rates even though they are close to zero.