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Wild day
on Wall StreetThe Dow breaches 10,000, falling 115 after opening off 433
Star-Bulletin news services NEW YORK -- Stocks dropped sharply in volatile trading today, slicing more than 400 points off the Dow Jones industrials before bargain hunters moved in and helped the market recover most of its losses.Investor despair over a generally bleak earnings outlook brought the Dow to its first finish below 10,000 since March 14, although the blue chips managed to regain more than 300 points of their early loss. The tech-focused Nasdaq composite index also ended the day with a loss, but it also rebounded smartly from its lows for the day.
The Dow closed down 114.69, or 1.1 percent, at 9,975.02, largely because of a huge drop in IBM. An earlier decline of more than 433 points sent the blue chip index to its lowest intraday trading level since March 24, 1999.
The Nasdaq fell 42.40, or 1.3 percent, to 3,171.56, bobbing in and out of positive territory after rebounding from a nearly 188-point slide in the first hour. And the Standard & Poor's 500 index was down 7.84 at 1,342.13, having recovered from an early drop of 44 points.
"I think we are near the bottom, but this is a bottom that's going to need some credibility," said Brian Belski, a fundamental market strategist at U.S. Bancorp Piper Jaffray, who said bargain hunting, not any resolution of market problems, was responsible for the upturn. "There are still doubts about earnings growth rates and there are going to be doubts about the rally and reversal today."
Bill Barker, an investment strategy consultant with Dain Rauscher, said, "we're working our way through earnings, but the fundamentals haven't changed."
"Oil is still high, the euro is down and the Middle East is still in a potentially explosive situation," he said.
"I think that we had a momentary panicky situation. For about an hour, the sellers were in control," said Bill Barker, investment strategy consultant for Dain Rauscher. "But there's a lot of cash out there and people continue to buy on market weakness without fear."
International markets also fell. Germany's DAX index was off 0.75 percent, Britain's FTSE 100 fell 0.89 percent, and France's CAC-40 dropped 2.14 percent.
Selling in Asia, which ended before U.S. markets opened this morning, was more severe with Japan's Nikkei stock average down more than 3 percent and Hong Kong's Hang Seng index falling 2.8 percent.
Analysts said international investors were reacting to IBM's earnings report, issued after U.S. markets closed yesterday, which were in line with expectations, but indicated growth is slowing down. "Clearly this is a devastating blow to the market when it is not in any condition to handle any more bad news," said Art Hogan, an analyst at Jeffries & Co.
Declining issues outnumbered advances by a 2-to-1 margin with 995 up, 1,888 down and 431 unchanged on the New York Stock Exchange. Volume was 1.17 billion shares, well ahead of the 906.67 million shares yesterday.
The NYSE composite index fell 4.30 to 625.16; the American Stock Exchange composite index lost 1.42 to 898.11; and the Russell 2000 index fell 4.67 to 466.21.
The price of the Treasury's 10-year note was up 1/32 point, or 31 cents per $1,000 in face value; its yield fell was unchanged at 5.67 percent. The 30-year bonds were down 1/32 point and yielded 77 percent, also unchanged from late yesterday.
Stock market activity wasn't expected to end with the close of regular trading. With the third-quarter earnings season at its peak, investors were waiting for results from Microsoft and Apple Computer. At the end of regular trading, Apple was off 6 cents at $20.06. America Online also reported its earnings after regular trading ended. AOL rose $3.54 to $47.14 in the regular session.
Intel, which reported earnings in line with analyst estimates late yesterday, rose $1.94, or about 5 percent, to $38.13. IBM fell $17.56, nearly 16 percent to $95.54, after dropping to as low as $90.25 in morning trading. The decline accounted for more than 100 points of the Dow's early slide.