Wall St. Closes Mixed in Wake of Sell-Off; Bond Yields Fall

The U.S. stock market stabilized Thursday following three days of volatile trading, but Nasdaq still posted its fifth loss in six sessions.

In foreign trading, key markets managed modest gains after Wednesday’s rout.

Meanwhile, Treasury bond yields continued to plummet ahead of Tuesday’s Federal Reserve meeting. The dollar rose to a 20-month high against the yen.

The mood on Wall Street was tense in the wake of Wednesday’s steep sell-off, which saw the Dow Jones industrials dive 317 points amid growing fears over the global economy. But the Dow surged at the opening Thursday, before pulling back and trading in a narrow range the rest of the day.

The Dow finished up 57.82 points, or 0.6%, at 10,031.28. The broader Standard & Poor’s 500 index also gained 0.6%.

The Nasdaq composite, however, sank 31.38 points, or 1.6%, to 1,940.71. The index struggled for much of the day, then sold off in the final hour.

Falling stocks outnumbered winners by 19 to 17 on Nasdaq, and winners had a slight edge on the New York Stock Exchange. Volume eased from Wednesday’s high levels.

Analysts had little encouraging to say about Thursday’s action. “The real question that is smacking us in the eyeballs is, has the stock market reached a level that can be stabilized and investors can be encouraged?” said Hugh Johnson, chief investment officer for First Albany Corp. Unfortunately, “I’m not impressed” by Thursday’s mixed session, he said.

Wednesday’s losses had been triggered by fresh concerns about the health of Japanese banks and the potential for financial woes to spread worldwide. But on Thursday, Japan’s Nikkei stock index rallied 2.6% to 12,152.83 after diving initially.

In Europe, the German market rebounded 1.7%, and the British market gained 0.8%. European stocks plunged Wednesday.

In the Treasury bond market, investors continued to snap up bonds to lock in yields, apparently betting that the Fed on Tuesday could cut its key short-term interest as much as 0.75 point to 4.75% to help keep the slowed U.S. economy out of recession.

The two-year T-note yield tumbled to 4.24% from 4.30% on Wednesday. The 10-year T-note--a benchmark for mortgage rates--fell to 4.79% from 4.82%. Yields now are at two-year lows.

In currency trading, there was no sign that foreigners were fleeing U.S. assets. Indeed, the dollar jumped to a 20-month high of 122.32 yen. The dollar also gained against the euro currency after the European Central Bank decided to leave its key interest rate unchanged.

Some analysts worry the Central Bank is acting too slowly to lower rates amid global economic fears.

Among Thursday’s highlights:

* Semiconductor stocks led Nasdaq lower. Micron Technology fell $2.22 to $41.30, Intel eased 56 cents to $28.50, and Vitesse Semiconductor slid $3.31 to $38.88.

* Software stocks also were weak. Veritas Software fell $5.31 to $54.38, and PeopleSoft dropped $3.19 to $19.

But after the market closed, Oracle reported earnings that matched lowered expectations.

* Financial stocks recouped some of the losses they suffered Wednesday. Citigroup gained $1.50 to $46.40, Golden West Financial surged $3.21 to $55.60, and Merrill Lynch rose $2.81 to $55.51.

* Utility stocks attracted buyers. Southern Co. jumped $2.06 to $31.74, and Orion Power surged $1.95 to $25.25.

* Some retail shares showed strength. Home Depot added $1.58 to $43.20, and Abercrombie & Fitch rose $1.31 to $32.39.

Market Roundup: C7-C8