A WILD QUARTER ON WALL STREET : Dow Takes a Beating, but Closes Slightly Higher
Stocks recovered late Thursday from another steep dive, closing the week mixed as weary traders headed out for the three-day holiday weekend.
The Dow industrial average plunged more than 65 points in early trading, in what began to look like the third mini-meltdown session in a row.
But buyers returned to key blue-chip stocks late in the day, aided by easing interest rates. The Dow closed up 9.21 points to 3,635.96, its first gain in six days, and that recovery rescued the broad market as well.
The Standard & Poor’s 500-index also eked out a gain of 0.22 point, to 445.77. Losers still trounced winners by 2 to 1 on the New York Stock Exchange, however, and most stock indexes finished with small losses in very heavy trading.
Analysts said the market’s comeback reflected some bargain-hunting by investors who believe stocks have fallen too far, too fast. But some Wall Streeters also cautioned that technical, quarter-end asset shifts by portfolio managers may have suggested more bullishness than is really present among beleaguered investors.
“A lot of blood was spilled on the Street this week,” said Lance Zipper, head of Nasdaq trading at Kidder, Peabody & Co.
Traders also noted that computer-generated “program” trading continued to buffet the market Thursday, as stocks’ rising volatility produces short-term trading opportunities.
The Dow sank 138.77 points for the week, its worst loss since a 216.26-point descent during the week ended Oct. 13, 1989.
New York Stock Exchange volume totaled 399.3 million shares Thursday, the busiest day since 446 million shares traded on March 18--a “triple-witching” options and futures expiration date.
Most financial markets will be closed today for Good Friday. What happens on Monday, analysts say, may depend on how bullishly investors interpret today’s government report on March employment.
If the number is strong, it could reignite fears that the Federal Reserve Board will tighten credit again soon. The Fed’s decision to boost short-term interest rates this year, to restrain the burgeoning economy, has been widely blamed for bursting stock and bond markets’ bubbles.
Early Thursday, bond yields soared anew after the Chicago Purchasing Management Assn. reported improved economic conditions in the region.
The yield on 30-year Treasury bonds jumped as high as 7.19% on the news. But buying later in the day pulled the yield back down to 7.08%, versus 7.10% Wednesday. A week ago the bond was at 6.95%.
As in the stock market, bond traders warned that Thursday’s mini-rally may not mean that the avalanche of selling that began this week has run its course.
“That little rebound toward the end of the day didn’t represent any huge institutional buying” of bonds, said J. Thomas Allen, president of Advanced Investment Management in Pittsburgh. “It’s just nibbling around the edges.”
Higher Treasury bond yields were reflected in the corporate bond market, where companies were forced to increase yields on new issues or to delay offerings.
Also, yields on some actively traded municipal bonds surged as much as 0.15 points as concerns about high rates in the Treasury market continued to fuel selling of munis by mutual funds.
In the stock market, bargain-hunters went after many industrial and technology shares, as confidence improved.
“But the downturn may not necessarily be over,” said Don Hays, investment strategist at Wheat First-Butcher & Singer. “The market is trying to hit bottom, but there’s no real evidence that that’s the case yet.”
One positive sign was that many foreign stock markets didn’t follow Wall Street sharply lower after Wednesday’s 72.27-point Dow plunge. In London, the FTSE-100 index eased just 6.0 points to 3,086.4. Frankfurt’s DAX index lost 14.42 points to 2,133.11.
Tokyo suffered worse, with the Nikkei index falling 447.99 points, or 2.3%, to 19,111.92.
Among U.S. market highlights:
* The Dow was pulled up by Allied Signal, up 2 1/4 to 36 1/2; GE, up 1 1/4 to 100; McDonald’s, up 1 1/8 to 56 7/8; J.P. Morgan, up 2 1/4 to 62 3/4; and Caterpillar, which jumped 2 7/8 to 112 3/8.
* Technology stocks rebounding included Intel, up 1 1/4 to 67 1/2; Hewlett-Packard, up 2 1/8 to 82 1/8; Autodesk, up 3 to 58; and Motorola, up 3 1/8 to 101 1/4.
* Gold surged $5.70 to $391.80 an ounce, on concerns over unrest in South Africa and on safe-haven buying in reaction to the stock market’s problems. Silver shot up 14.5 cents to $5.79.
* Crude oil rose for a third day on the New York Merc, as the market continued to rebound from sharp losses on Monday. Light, sweet crude for May delivery rose 41 cents to $14.79 a barrel.
* MORE MARKETS COVERAGE: Small investors are not panicking. A1
Wall Street divided on “circuit breakers.” D3
President seeks to calm the jittery markets. D3
