Stocks Recover From Plunge; Yields Edge Up
Stocks ended moderately lower and bond yields edged higher Wednesday as buyers stepped in after a sharp sell-off sparked by worries about the turmoil in Asian and Russian financial markets.
The dollar rose against the German mark, but edged lower against the Japanese yen.
The Dow Jones industrial average held a final loss of 27.16 points, or 0.3%, at 8,936.57 after roaring back from a deficit of more than 150 points. On Tuesday, the blue-chip index ended down 151 points.
Volume was heavy, with 703.56 million shares changing hands by the close on the New York Stock Exchange.
The technology-heavy Nasdaq composite index, worst hit for much of the session, ended up 3.01 points at 1,781.10 as bargain hunters favored computer stocks in particular.
The Standard & Poor’s 500 fell just 1.79 points to 1,092.23 after sliding by as much as 20 points during the session.
Even with the late recovery, the decline was emphatic. Almost three stocks fell for every one that rose. Just 80 stocks set 52-week highs, while 484 fell to 52-week lows. At its lowest point, the Dow fell below its April 1 close, wiping out almost two months of gains.
The Russell 2,000 index of smaller stocks closed 1.1% lower, after being down as much as 2%. At its low, the Russell was nearly 10% below its April 21 high. A 10% drop is considered a “correction.”
Traders said institutional investors were putting cash to work, snapping up the stocks that have been battered, particularly technology issues.
“I saw a lot of institutions that saw these declines in certain stocks and were coming in to buy them,” said James Volk, co-director of institutional trading at D.A. Davidson & Co., adding that more volatility may come. “I don’t think the last shoe has dropped.”
Bargain hunters resurfaced after a second day of selling that was fueled by jitters over the economic turmoil in Asian and Russian markets and its impact on U.S. corporate earnings.
“The selling was contained by the buying-on-dips strategy,” said Bill Meehan, chief market analyst at Cantor Fitzgerald.
More companies are expected to warn Wall Street in coming weeks that their second-quarter earnings might disappoint.
The price of the bellwether 30-year Treasury bond fell, pushing its yield up to 5.84%, from 5.83% Tuesday.
Among Wednesday’s highlights:
* The Dow’s decline was led by large financial institutions that derive a large part of their profits overseas. Travelers Group fell $1.69 to $61.06 and Citicorp lost $4 to $148.88. J.P. Morgan lost $3.38 to $126.69.
* Gainers leading the rebound included Microsoft, up $2.38 to $86; Merck, up $2.31 to $118.94; and Pfizer, up $4.81 to $108 after it said it’s investigating the deaths of six people who took its Viagra impotence pill. The drug maker said it won’t rule out the possibility that some may have improperly mixed Viagra with heart medicines.
In currency trading, the yen has fallen to its lowest levels in seven years against the dollar as doubts about the Japanese economy have grown. In late trading, the dollar was modestly lower at 137.40 yen from 137.83 and higher at 1.784 German marks from 1.7715 at the close Tuesday.
Moody’s Investors Service on Wednesday downgraded its ratings of major Japanese banks because of Japan’s troubles and the Asian crisis.
The weak yen raises concerns for U.S. corporate profits because it makes Japanese exports cheaper and makes it harder for U.S. companies to sell goods abroad.
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Market Roundup, D8
