NEW YORK - Wall Street capped a week of remarkable volatility with a big advance Thursday that left stocks higher for the week but didn't silence all of investors' concerns about the economy and the financial system.
Bargain-hunting and a milder-than-expected drop in a regional manufacturing report helped leaven stocks Thursday. The Dow Jones industrial average rose about 260 points on the day, giving the blue chips a gain of more than 3 percent for the week. Broader indexes finished the week with gains of 2 percent to 3 percent. The markets are closed for Good Friday.
A week that opened with fearful questions over the soundness of the financial system following the near collapse of Bear Stearns Cos. ended on a more upbeat note, thanks in part to the Federal Reserve's efforts to inject both liquidity and calm into the markets.
The central bank not only again deployed its primary tool for stimulating economic activity - an interest rate cut - but also took several steps this week aimed at oiling the troubled credit markets, making it easier for banks to breathe. Policymakers said they would loan directly to investment banks and accept as collateral much of the now-shunned debt that is backed by mortgages. A spike in defaults on home loans has made many financial players hesitant to extend credit.
But while many investors praised the Fed's unusual steps - including the deal it brokered for JPMorgan Chase & Co. to buy a liquidity-starved Bear Stearns for a fraction of its value only a week ago - many on Wall Street still hung onto some misgivings about the banking system and the economy.