Dow rally fizzles;
global markets advance

NEW YORK -- A late bout of selling today cut short the Dow industrial's bid to extend yesterday's rebound from August's scary selloff.

The Dow Jones industrial average, down 512.61 on Monday and up 288.23 yesterday, fell 45.06 to close at 7,782.37.

The average of 30 blue-chip stocks had been holding onto gains until the final minutes of trading.

At one point, the Dow was up as much as 125.13 at 7,952.56, or 44 points above where it began the year, at 7,908.25.

Some broader indicators rose, however, including the Nasdaq composite index, which was adding to yesterday's record point gain.

The Dow's 288-point rise yesterday was the second-biggest daily point gain ever and came on record trading of more than 1.2 billion shares on the New York Stock Exchange.

Trading was heavy today, but volume was well below yesterday's frantic pace, when the Dow gained 3.8 percent.

Today's decline left the Dow 16.7 percent below its record of 9,337.97 set on July 17 and down 1.59 percent for the year to date.

Trading was a bit calmer today than during the past two sessions, which were buffeted huge swings.

Wall Street's dramatic rebound yesterday sent Asian and European stocks rising today, but some analysts had wondered whether the rallies could be sustained against a gloomy outlook in many economies.

New York traders were slow to recognize the serious potential fallout from the financial troubles in Asia and Russia, and uncertainty might hang on for some time in markets that now lack any firm sense of direction, said Jeremy Batstone, an analyst at NatWest Stockbrokers in London.

"Sentiment is finally beginning to crack," Batstone said. "The market is beginning to wake up."

Blue chips rose on the biggest European stock markets -- London; Frankfurt, Germany; and Paris -- following gains in Tokyo, Hong Kong and Singapore.

London's Financial Times-Stock Exchange 100-share index closed with a gain of 1.3 percent, Frankfurt's electronic Xetra DAX rose 1.9 percent; and the CAC 40 index in Paris gained 2.3 percent.

But traders remained cautious about the strength of the rallies that some called a knee-jerk response to yesterday's gains on Wall Street.

Some investors perceived the recent price drops as good opportunities to buy quality stocks, analysts said, but many figured the markets are a pretty risky proposition currently.

In Tokyo, the 225-issue Nikkei stock average rose 6.99 points, or 0.05 percent, for a close of 14,376.62, which was below its high for the day. Although it was the Nikkei's third straight day of higher prices, many people still believe Tokyo shares have a long way to go after sinking to a 12-year low Friday.

In Hong Kong, shares closed sharply higher, with the blue-chip Hang Seng index rising 4.2 percent.

In Singapore, where the stock market has recently undergone one bad day after another, the Straits Times Index initially rose 1.1 percent but finished with a gain 0.55 percent.

But given how long Asia's financial crisis has battered its stock and currency markets, Wall Street's one-day recovery may only amount to a brief respite for the region.

The Dow's volatility, and the big losses it has suffered over the summer, have left some economists wondering whether the U.S. economy could slow down and even slip into a recession.

Russian instability, widely regarded as that country's worst since the fall of Communism, already has begun to batter European companies, economies and stock markets.

Questions also remain about the future of Japan, the world's second-largest economy and a crucial factor in Asia.

On Wall Street today, advancers led decliners by about a 13-to-9 margin on the New York Stock Exchange, where volume came to 891.58 million shares, down from 1,204.93 million shares yesterday.

The Standard & Poor's 500 index was down 3.78 at 990.48, the NYSE composite index was 1.30 lower at 494.63, but the American Stock Exchange composite index was up 13.93 at 602.61.

The technology-heavy Nasdaq composite index gained 17.76, or 1.13 percent, to close at 1,592.85. The index is up 1.43 percent so far this year.

The Russell 2000 index of smaller companies rose 4.55, or 1.31 percent, to 352.65.

The 30-year Treasury bond rose 1/32, or 31 cents per $1,000 bond, leaving its yield at 5.34 percent.

The dollar rose against the yen for the first time in six days as speculation the Federal Reserve might immediately cut rates waned and further signs suggested that Japan won't recover from its recession soon. In late New York trading, the dollar rose to 137.75 yen from 136.77 yen yesterday.