Wall Street mixed in seesaw trading
NEW YORK » Wall Street ended a temperamental session widely mixed yesterday after investors grappled with JPMorgan Chase & Co.'s government-backed buyout of the stricken investment bank Bear Stearns Cos.
The Dow Jones industrials recovered from an initial drop of nearly 200 points to finish up about 21 points. The broader Standard & Poor's 500 and Nasdaq composite indexes ended lower as investors bailed out of investment banks and small-cap stocks and fled instead to large companies apt to be reliable during a weak economy.
The unprecedented moves by the Federal Reserve gave investors a bit of solace on what many predicted would be a day of precipitous losses in the stock market.
But the market remained extremely volatile. The sale of Bear Stearns -- at a minuscule $2.21 a share as of yesterday's close, or a total of $260.5 million -- stirred fear among investors worldwide about other banks' exposure to the troubled credit markets.
"The market has absolutely no idea what's going on," said Dan Alpert, managing director of Westwood Capital. "Some people have accused them of whistling past the graveyard -- I don't think they even know where the graveyard is."
The Dow rose 21.16, or 0.18 percent, to 11,972.25, after falling nearly 200 and rising more than 100. The blue chip index was supported partially by JPMorgan, by far the biggest gainer among the 30 component stocks. JPMorgan rose $3.77, or 10.3 percent, to $40.31.
The Standard & Poor's 500 index fell 11.54, or 0.90 percent, to 1,276.60. The Nasdaq composite index, heavily populated by small and high-tech companies, fell 35.48, or 1.60 percent, to 2,177.01. The Russell 2000 index of smaller companies fell 12.42, or 1.87 percent, to 650.48.
Declining issues outnumbered advancers by about 5 to 1 on the New York Stock Exchange. Consolidated volume came to 5.69 billion shares, up from 5.18 billion Friday.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.30 percent from 3.44 percent late Friday.
The simple fact that Bear Stearns was valued at around $2 a share heightened investors' worries about how much of a blow the credit markets are dealing the financial industry. "How widespread is it? Nobody knows," Detrick said.
Some investors worry Lehman Brothers Holdings Inc. might be next to fall. Lehman -- the investment bank considered most similar to Bear Stearns -- and other major investment banks are slated this week to report quarterly results.
Lehman fell $7.51, or 19 percent, to $31.75.
While investors focused on the financial sector, fresh economic news offered little solace. The Fed said output at the country's factories, mines and utilities fell by 0.5 percent in February, the biggest decline last October. Many analysts had been expecting a slight increase of one-tenth of one percent.
The dollar sank to a record low against the euro and hit a 12 1/2 year low against the Japanese yen, while gold prices rose to another record high. Crude oil plunged from record levels by $4.53 to settle at $105.68 per barrel on the New York Mercantile Exchange.