Late-day rebound helps pare losses
NEW YORK » Wall Street closed another difficult session lower but well off its lows yesterday after a late-day rebound in financial shares lifted many other stock sectors. Investors still kept their distance from technology shares after a lackluster forecast from Cisco Systems Inc.
Stocks extended the previous day's steep losses after Federal Reserve Chairman Ben Bernanke warned that a raft of economic troubles could dent business growth and after Cisco's comments touched off unease about business spending.
But buyers moved back in late in the session, apparently thinking the market's selloff had been overdone even with the host of concerns investors face, observers said.
Bernanke, appearing before Congress' Joint Economic Committee with the Fed's economic forecast, warned of threats to the economy but didn't offer solid evidence the bank is prepared to further cut interest rates.
The slide seen during much of the session -- at one point the Dow had fallen another 200 points -- came a day after stocks tumbled amid concerns about continuing credit woes, a weakening dollar and rising oil prices.
Investors also had fresh reason for concern about toxicity within the credit markets. Morgan Stanley issued a detailed accounting of its exposure to subprime debt, pleas- ing investors by eliminating some of the uncertainty that has wracked Wall Street to varying degrees in recent months.
But Morgan said its fourth-quarter profit could be reduced by $2.5 billion in write-downs related to troubles in the credit market, a reminder of the widespread damage from soured loans.
The Dow Jones industrial average fell 33.73, or 0.25 percent, to 13,266.29. The decline comes a day after the blue chips fell 360.92; Wednesday's decline was the third drop of more than 350 points in a month, offering the latest sign of how jittery many investors remain.
Declining issues outnumbered advancers by more than 8 to 7 on the New York Stock Exchange, where consolidated volume came to a heavy 5.35 billion shares compared with 4.22 billion traded Wednesday.
Broader stock indicators also came off their lows. The Standard & Poor's 500 index fell 0.85, or 0.06 percent, to 1,474.77, and the technology-heavy Nasdaq fell 52.76, or 1.92 percent, to 2,696.00.
The Russell 2000 index of smaller companies rose 4.94, or 0.64 percent, to 780.90.
"There is a tug-of-war going on," Thomas said. "We'll see more volatility until there is clarity with the subprime issue."
Government bonds rose as stocks retreated. The yield on the 10-year Treasury note, which moves opposite its price, fell to 4.27 percent from 4.30 percent late Wednesday. It rose to 4.28 percent in after-hours trading.
The dollar was lower against most other major currencies.
Gold prices advanced for the fifth straight day as investors looked for alternatives to an anemic dollar. Gold rose $4 to a record close of $837.50 an ounce on the New York Mercantile Exchange.
Light, sweet crude fell 91 cents to $95.46 on the New York Mercantile Exchange.