Dow Gains After Morning Sell-Off
Stocks rebounded Thursday from a morning sell-off to close mixed.
Many technology shares continued to be under heavy selling pressure, but buyers flocked to drug and food shares, among others.
Treasury bond yields dropped again. In currency trading the yen slumped against the dollar as the Japanese government sold yen.
On Wall Street, the Dow Jones industrial average gained 114.03 points, or 1.3%, to 8,681.42 after falling as much as 96 points early in the day.
The Nasdaq composite rallied from a loss of 46 points to close down 3.33 points, or 0.2%, at 1,460.71.
Rising issues outnumbered losers by 19 to 12 on the New York Stock Exchange, but losers had an 18-17 edge on Nasdaq.
Volume was relatively light as some traders were off for the Jewish holiday Yom Kippur.
Analysts said the market’s action mostly reflected quarter-end portfolio adjustments by money managers who want clients to see certain shares, and not others, on their Sept. 30 statements. The quarter technically ends today.
“People are shifting around in their portfolios, getting more defensive,” said Jon Brorson, director of equities at Northern Trust in Chicago.
That attitude helped boost drug stocks. They are considered “defensive” because the companies’ businesses tend to fare well even in economic downturns.
By contrast, many investors continue to exit battered technology stocks on concerns that a weaker economy will mean more sales and earnings problems for tech firms.
Investors also snapped up Treasury securities Thursday, pushing yields lower. The yield on the 10-year T-note dropped to a multiyear low of 4.55% from 4.63% Wednesday.
The two-year T-note fell to a historic low of 2.77% from 2.82%.
In currency markets the dollar bought 119.59 yen, up from 117.85 Wednesday, as the Japanese government dumped yen to weaken the currency.
Japanese policymakers want a weaker currency to bolster exporters’ earnings and revive growth. A lower yen reduces the cost of Japanese goods for foreign buyers.
“They’re not fooling around--they really want to ensure a weaker yen,” Mark Thome, vice president of foreign exchange at Fortis USA Financial Markets, told Bloomberg News.
With one day left to go in the third quarter, the Dow is down 19.5% for the year, the Standard & Poor’s 500 index is down 22.9%, and the Nasdaq composite is down 40.9%.
Among Thursday’s highlights:
* Semiconductor stocks were among the weakest tech issues, sending the SOX chip stock index down 2.3% to its lowest level in nearly three years.
Intel dropped 35 cents to $20.55, Broadcom fell $2.93 to $20, Advanced Micro Devices lost 35 cents to $8 and PMC-Sierra fell $1.67 to $10.05.
* Among other tech issues, Adobe Systems fell $1.07 to $22.84, Brocade Communications lost $1.53 to $14.16 and Corning was off 88 cents to $8.35. Brokerage Morgan Stanley cut profit forecasts for this year and next for Brocade.
But Citrix Systems gained $3.91 to $22.29 and Lexmark jumped $2.28 to $44.76.
* In the drug sector, Merck rose $2.86 to $66.21 and AstraZeneca gained $2.46 to $46.14.
* Among food issues, winners included Hershey, up $1.24 to $64.94, and Tootsie Roll Industries, up $1.65 to $38.40. Also, Philip Morris gained $2.14 to $49.
* Defense stocks gained as investors looked for the companies to benefit from an increase in government spending. General Dynamics soared $4.21 to $89.60, Northrop Grumman jumped $4.37 to $102.97 and Alliant Techsystems rose $5.79 to $89.34.
* Energy stocks rebounded as natural gas and crude oil prices rose after diving in recent days. Exxon Mobil jumped $2.41 to $38.42, Anadarko Petroleum surged $1.92 to $45.97 and Chevron surged $4.73 to $83.50.
* Electric utility shares overall didn’t get a lift from the surprise takeover bid by Reliant Resources for Orion Power, announced late Wednesday. The Dow utility index fell 1.4%, though Orion surged $5.86 to $25.06. Reliant lost 93 cents to $15.75. Reliant will pay $26.80 in cash for each Orion share.
Market Roundup, C7, C8
