Stocks pull back further
Wall Street closed another difficult session lower Thursday, though well off its worst levels of the day, thanks in part to a rebound in beaten-down financial shares.
The Dow Jones industrial average, which had plunged 361 points Wednesday amid fresh concerns about the financial system’s health, fell as much as 220 points early Thursday but closed off 33.73 points, or 0.2%, at 13,266.29.
The Standard & Poor’s 500 index, which on Wednesday slumped 2.9% -- its worst drop since February -- finished down 0.85 of a point, or less than 0.1%, at 1,474.77.
But the technology sector, which had been a bright spot in recent months, couldn’t muster the kind of turnaround that the broader market saw. The Nasdaq composite index fell 52.76 points, or 1.9%, to 2,696.00 after a disappointing business forecast from computer networker Cisco Systems soured investors on the tech sector.
Cisco slumped $3.12, or 9.5%, to $29.63, a three-month low.
Despite the market’s comeback, losers still edged winners on Nasdaq and on the New York Stock Exchange. Trading was heavy.
In other trading, the dollar continued to slide and gold rose to another 27-year high.
In commodity markets, $100-a-barrel oil remained just out of reach as prices pulled back modestly for a second day. Near-term futures eased 91 cents to $95.46 a barrel.
Stocks opened steady, then extended the previous day’s steep losses after Federal Reserve Chairman Ben S. Bernanke warned that a raft of economic troubles could dent business growth in the near term. But the Fed chief also expressed optimism about the longer-term outlook for the economy and signaled that the central bank wasn’t inclined to cut interest rates further.
Disappointed investors drove the Dow as low as 13,079.48 by midday, with financial issues leading the sell-off. But buyers then began to pick among financial stocks, pulling prices up. The broader market followed.
When selling begins to cascade on down days such as Wednesday, “The market gets oversold regardless of the fundamentals,” said Brandon Thomas, chief investment officer of Portfolio Management Consultants. That then opens the door to bargain-hunters, he said.
The market also may have been helped by “short covering” -- stock purchases by bearish traders who had previously borrowed stock and sold it, expecting prices to drop. Some of them may have taken profits by closing out their trades Thursday as the market fell to two-month lows.
Among battered financial issues, Washington Mutual fell to a seven-year low of $18.38, then closed at $19.39, down 65 cents.
Citigroup ended down 51 cents at $32.90 after falling as low as $31.05. Lehman Bros. sank as low as $52.70 and closed at $56.11, up 15 cents.
Morgan Stanley rose $2.49 to $53.68 after the nation’s No. 2 investment bank appeared to relieve investors who had grown fearful that its mortgage-related losses could be worse. The bank late Wednesday said fourth-quarter earnings could be cut by about $2.5 billion because of credit losses.
Still, investors’ nervousness about the financial system was evident in falling yields on Treasury bonds, as investors continued to snap up those securities. The 10-year T-note yield declined to 4.29%, down from 4.31% on Wednesday and the lowest since 2005.
An auction of $5 billion in new 30-year T-bonds went better than had been expected and helped feed demand for other government securities.
The battered dollar remained under pressure after the European Central Bank and the Bank of England held short-term interest rates steady -- lending support to their currencies.
The euro held at $1.467, the record high it reached Wednesday. The British pound rose to a 26-year high of $2.109 from $2.105.
What was bad for the dollar was good for gold once again. Near-term gold futures in New York rose $4.20 to $835.20 an ounce, the highest since 1980.
Among the day’s market highlights:
* Tech shares hit by profit-taking included Google, off $39.10, or 5.3%, to $693.84; Apple, off $10.83, or 5.8%, to $175.47; Microsoft, down 78 cents, or 2.2%, to $34.74; and Intel, down 97 cents, or 3.6%, to $25.93.
* Retail shares were mostly lower on news of unexciting October sales. J.C. Penney fell 87 cents to $50.27, Chico’s FAS slid $1.21 to $11.01 and Kohl’s lost $1.71 to $49.16.
* In the commodity sector, mining firm Rio Tinto rocketed $82.70 to $440.20 after rival BHP Billiton confirmed speculation that it would seek a merger. BHP fell $3.50 to $76.85. Other commodity issues were mixed.
* First Solar, which makes solar-power modules, soared $57.31 to $224.43 after reporting a tenfold rise in quarterly earnings. The stock is up 652% this year.
* In foreign trading, most Asian markets were sharply lower on the heels of Wall Street’s slide Wednesday. The Hong Kong market fell 3.2%. Japan’s Nikkei index slid 2%. The Indian market lost 1.2%.
