What's with these last minute surges on Wall Street?

Factual Questions
1

I must preface this question and state that I know virtually nothing about how the stock market works.

Alright then. I check the news pretty frequently here at work, and I’ve noticed something the past few weeks. Near the closing bell at the NYSE, a huge increase in the DOW is considered “breaking news.” Like today on MSNBC, it says, “BREAKING NEWS: Dow up about 350 points at closing bell.”

My question is, what leads to these surges? A few times I’ve seen the DOW shoot up 700-800 points in the final hour. What exactly is going on during this time and why at the closing bell?

In contrast, I haven’t seen the DOW fall quickly at the closing bell. During those days where it was losing ~500 points, it happened gradually and consistently over the course of the day. However, multiple times it has seen a huge spike in the waning minutes.

Why?

2

I heard someone on the tube (sorry no cite) talk about computerized trades that happen within a few minutes of the closing bell. Not sure why they would happen then but that was their explanation. It’s probably worth exactly what you paid for it!

3

Last week, the two large 6% losses came at nearly the end of the day.

4

That might explain some things… I too know little about the stock market, but had noticed drops right at the end of the day.

5

Actually, almost every big loss in the current financial mess has included a huge drop in the final hour. I keep joking with my wife that the NYSE needs to start closing an hour earlier in order to cut their losses.

It’s not just my perception, either. There have been numerous references to this effect on the news channels.

There have been many days of equally large gains. I haven’t especially noticed a last minute lift effect, but it could happen.

I think the explanation is as simple as that traders spend the day gauging which way the trends are running and then try to squeeze in as much business as they can before the market closes. Last minute rush. Nothing very mysterious about it.

6

Day traders don’t particularly want to be in positions overnight when they can’t trade.

Like, imagine you were short Citibank on Friday. You could have kept your short position, and then got destroyed today because of the bailout and the 50% increase. At least if it was announced during the trading day, you might have been able to get out if you were quick, or if you heard a credible rumor. Luckily you bought to cover at the end of the day on Friday… which would have driven Citibank stock up.