Stocks Finish Mixed

The Dow and S&P 500 posted gains while the Nasdaq dipped Thursday as investors hunted for bargains in beaten-down shares

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U.S. stocks closed mixed Thursday, as steep price drops in the previous two sessions drew bargain hunters into the market. These buyers, however, failed to support the entire market, as witnessed by closing gains in the Dow industrials and S&P 500 but a drop in the Nasdaq. Data showing a rise in jobless claims and a drop in home prices kept fears of a recession alive.

Former Federal Reserve Chairman Alan Greenspan, the current object of the ire of print and TV commentators, was seen calling for more financial regulation at a House hearing Thursday on housing and the financial crisis. Meanwhile, the Bush administration is considering a $40 billion program to forestall housing foreclosures, according to a press report.

Crude oil futures surged amid speculation that OPEC will cut its output to boost prices. Bonds turned mixed after rising earlier. The dollar index fell. Gold also lost ground.

On Thursday afternoon, the Dow Jones industrial average ended higher by 172.04 points, or 2.02%, at 8,691.25. The S&P 500 index added 11.33 points, or 1.26%, to 908.11. But the Nasdaq composite index fell 11.84 points, or 0.73%, to 1,603.91.

On the New York Stock Exchange, 19 stocks were lower in price for every 12 that advanced. The ratio on the Nasdaq was 20-8 negative.

European stocks were mixed Thursday, with the FTSE 100 index in London up 1.16% at 4,087.83, the CAC 40 index in Paris 0.38% higher at 3,310.87 and Germany's DAX index down 1.12% at 4,519.70. In Asia, markets suffered more selling, with Tokyo stocks falling 2.46%, Hong Kong down 3.55%, and Shanghai lower by 1.07%.

Lawmakers called key players from the past and present to congressional hearings in an effort to find out what caused the biggest financial crisis since the 1930s and determine how the government plans to get the nation out of the mess. Former Fed Chairman Alan Greenspan, the star witness today before the House Oversight and Government Reform Committee, faces questions about actions the government took or didn't take that might have contributed to the boom in subprime mortgages and the subsequent housing market collapse that has led to the loss of billions of dollars in investments, according to AP.

Greenspan, who was succeeded in 2006 by Ben Bernanke, was likely to find himself defending actions he took that are being blamed for contributing to the current crisis. Critics charge that he left interest rates too low in the early part of this decade, spurring an unsustainable housing boom, while also refusing to exercise the Fed's powers to impose greater regulations on the issuance of new types of mortgages, including subprime loans. It was the collapse of these mortgages and rising defaults a year ago that triggered the current crisis.

Greenspan recently described the current episode as the type of wrenching financial crisis that comes along only once in a century. He has defended the use of derivatives, so-named because their value is derived from the value of an underlying asset. He said they were useful in helping to spread risks.

Greenspan called for tighter regulation of financial companies, distancing himself from the free-market culture that he helped to create. Firms that bundle loans into securities for sale should be required to keep part of those securities, Greenspan said in prepared testimony to the House Committee on Oversight and Government Reform. Bloomberg reported on his testimony. Other rules should address fraud and settlement of trades, he said. Greenspan's office released the text ahead of the hearing scheduled for 10 a.m. EDT in Washington.

Paul Volcker, Greenspan's predecessor, said at a New York conference Wednesday that "We are really going to have to rebuild this system from the ground up." Volcker said the creation of complex financial products "instead of spreading the risk and creating transparency" wound up concentrating risk and "opaqueness." Volcker, 81, said the current crisis is more complex than any other in U.S. history.

House Financial Services Committee Chairman Barney Frank called this week for a freeze on executive bonuses and other stronger regulation of Wall Street, following passage of a $700 billion rescue plan for financial institutions. Frank said in a hearing in February that Greenspan "erred" in "his view that regulation was almost never required." Greenspan "often told us" that there were two options: "I can either deflate the entire economy or I can let the problems continue," Frank said. SEC Chairman Christopher Cox and former Treasury Secretary John Snow are also scheduled to appear at the House committee hearing today.