Image: Trader Jonathan Corpina
Richard Drew  /  AP
The S&P 500 index has lost 13 percent this month, putting the broad market measure on course for its worst August since 1998.
updated 8/22/2011 6:08:31 PM ET 2011-08-22T22:08:31

It was another day of big swings in the Dow Jones industrial average, but at least Monday ended with a modest gain.

The Dow soared 200 points in the morning, an encouraging start after four weeks of losses. By noon that gain shriveled to just 2 points, then came a rise of another 100 in the afternoon. At the end of the day, the Dow closed up 37 points.

Compared with the even wilder fluctuations over the past two weeks, Monday's trading looked relatively calm. The Dow has gained or lost at least 200 points eight days in August, including a 419-point plunge last Thursday. A flare-up of Europe's debt crisis and fears of a new U.S. recession have shaken investors, taking the Dow down 15 percent in one month.

Hewlett-Packard Co. rose 3.6 percent, the most of the 30 large companies in the Dow Jones industrial average. H-P sank 20 percent on Friday after saying it planned to sell its PC business and stop selling other products.

Bank stocks, which have been clobbered over worries about Europe's debt crisis, took another fall. JPMorgan Chase & Co. dropped 2.7 percent. Bank of America lost 7.9 percent, the biggest drop among the 30 Dow companies. Analysts at Wells Fargo cut their price target on the stock, citing fears that the U.S. could slip back into a recession.

Sam Stovall, chief investment strategist at Standard & Poor's equity research, cautioned against reading too much into the market's early jump Monday. "A two-hour rally isn't enough to change the trend," Stovall said. "It's natural in a declining market to have some days that run counter to the overall trend."

The S&P 500 index has fallen 16 percent since July 22 and 13 percent this month, putting the broad market measure on course for its worst August since 1998. After falling four weeks in a row, some stocks are appearing too cheap for investors to pass up, Stovall said.

Investors are still worried that the U.S. may fall into another recession. Some hope the Federal Reserve announces some kind of action to help the economy when it holds its annual retreat in Jackson Hole, Wyo., on Friday. It was at the same conference a year ago that Fed Chairman Ben Bernanke hinted that the central bank would buy Treasury bonds to push interest rates lower.

The Dow rose 37 points, or 0.3 percent, to close at 10,854.65.

The S&P 500 rose 0.29 points, or less than 0.1 percent, to 1,123.82. It had been up as many as 22 points. The Nasdaq rose 3.54 points, or 0.2 percent, to 2,345.38.

Stocks have fallen for four weeks on signs that the U.S. economy is slowing. The sharpest drops came Thursday with news of weaker manufacturing in the mid-Atlantic states and an increase in the number of people who applied for unemployment benefits.

The Chicago Board of Options Exchange's volatility index has soared 68 percent this month. That's a sign investors are anticipating more wide swings in the S&P 500, the index most professional investors use. The index fell 1.4 percent Monday to 42. The VIX index was below 20 for much of this year but spiked as high as 48 on Aug. 8 as the stock market's swings accelerated.

Treasury bond prices and gold have been rising this month as investors seek refuge from the turmoil in stocks. The yield on the 10-year Treasury note dipped below 2 percent last week, a record low. The yield ended the trading day at 2.10 percent Monday. Yields on bonds fall when demand for them increases.

Gold jumped $39.70, or 2 percent, to $1,892. Gold has gained 16 percent so far in August. It reached $1,900 in after-hours trading.

Six of the 10 industry groups in the S&P 500 rose. Telecom stocks rose almost 1 percent, the most of any industry in the index.

Boeing Co. rose 1.5 percent after Britain's Royal Air Force said it would buy 14 Chinook helicopters for $1.6 billion.

Quotes delayed 15+ min.

Lowe's Cos. rose 1.1 percent. The home improvement retailer said it will buy up to $5 billion of its stock over the next two to three years. Last week, Lowe's lowered its sales forecast for the second half of the year as shoppers grow more worried about the economy.

No major economic reports came out Monday. Later in the week, traders will be sorting through figures on new home sales, chain store sales, durable goods orders and weekly claims for unemployment benefits to see if another recession could be on the way. The government will also release a second estimate of second-quarter economic growth Friday. Another significant revision downward could alarm investors.

Three stocks fell for every two that rose on the New York Stock Exchange. Trading volume was above average at 4.8 billion.

The Associated Press contributed to this report.

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