Stocks close mixed in nervous trading
NEW YORK » Wall Street closed mixed yesterday, recuperating from a sharp plunge as investors snapped up bargain stocks on rumors that a bond insurer rescue plan is progressing and upbeat comments from Cisco Systems Inc.
Earlier in the session, the market sank after Merrill Lynch lowered its full-year earnings prediction for Citigroup Inc., which a Dubai fund executive said will need to raise more cash to stay in business. Another damper on trading was Intel Corp., which lowered its forecast for first-quarter profit margins.
The financial sector regained some steam after CNBC reported that a plan to save the bond insurer Ambac Financial is advancing nicely.
Technology stocks rebounded too after a Dow Jones Newswires report that Cisco CEO John Chambers said he is "even more comfortable" with the long-term growth targets the company has outlined.
"What we're seeing is a very nervous market, and nervousness breeds volatility," said Anthony Conroy, managing director and head trader for BNY ConvergEx Group.
The Dow Jones industrial average fell 45.10, or 0.37 percent, to 12,213.80, after tumbling more than 200 points earlier in the day.
Broader stock indicators finished mixed, also rebounding off their lows of the session. The Standard & Poor's 500 index fell 4.59, or 0.34 percent, to 1,326.75, while the Nasdaq composite index rose 1.68, or 0.07 percent, to 2,260.28. The Russell 2000 index of smaller companies fell 3.24, or 0.47 percent, to 680.98.
Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange. Consolidated volume came to 4.61 billion shares, up from 3.99 billion shares on Monday.
Bond prices sank as stocks regained their footing. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.63 percent from 3.56 percent late Monday.
The dollar weakened against most other major currencies, while gold prices rose.
Light, sweet crude fell $2.93 to settle at $99.52 a barrel on the New York Mercantile Exchange.
Citigroup, a Dow component, fell 99 cents, or 4.3 percent, to $22.10, after hitting a new nine-year low. The head of a government-owned investment firm in Dubai said Citigroup would need to raise more than nearly $20 billion it has already nabbed over the past few months to fix its debt problems.
Though some banks rebounded on the Ambac rumor, Bank of America Corp. fell $1.05 to $79.62, and JPMorgan Chase & Co. fell 63 cents to $39.19.
Ambac rose 78 cents, or 7.9 percent, to $10.72, while MBIA Inc., another bond insurer, rose 36 cents, or 2.9 percent, to $12.98.
Cisco recovered from its lows to close down 11 cents at $24.29. Dow component Intel also rebounded, finishing down a penny at $20 a share.
Another Nasdaq stock, Amazon.com, shot up $2.91, or 4.7 percent, to $65.34 on comments from its chief financial officer about the online retailer's 2008 revenue forecast that the market interpreted positively.