Wall St. investors
take wild ride

The Dow, down 380 points early,
pares its loss to 98 at the close
to avoid bear territory

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By Amy Baldwin
Associated Press

NEW YORK >> Despondent investors intensified their selloff of blue-chip stocks today, accelerating the decline in the Dow Jones industrial average and sending the stock market's best-known indicator into bear market territory for much of the session. A last-hour rally allowed the Dow to recover ground, but the index still closed with a loss of more than 90 points.

Investors are in "deep despair," said Hugh Johnson, chief investment officer for First Albany Corp. "There is a sense of giving up. They are extraordinarily depressed and demoralized."

The Dow, which dropped by triple digits in six of the past nine trading sessions, tumbled to the 9,379 level in the opening minutes of trading, putting the blue-chip index down more than 20 percent from the closing high of 11,722.98 it reached on Jan. 14, 2000. A decline of 20 percent is considered a bear market.

The Dow continued to slide in heavy late afternoon trading, falling more than 380 points. But it regained some ground in the final hour and closed down a more moderate 97.52 at 9,389.48, leaving it 19.9 percent off its peak.

Today's loss means the Dow, which last week suffered its worst-ever weekly point drop, has fallen 1,468.77, or 13.5 percent, over the last 10 trading sessions.

Broader market indicators were mixed. The Nasdaq composite index, down more than 62 percent from its own high of 5,048.62 reached March 10, 2000, advanced 67.47 to 1,897.70. The market's broadest measure, the Standard & Poor's 500, was down 4.56 at 1,117.58, having made a last-minute recovery of its own. The S&P 500 has lost more than a quarter of its value since peaking at 1,527.46 a year ago.

Decliners trounced advancers on the New York Stock Exchange, with 2,350 down, 788 up and 191 unchanged. Volume came to 2 billion vs. 1 billion yesterday. The NYSE composite index fell 8.79 to 566.35, the American Stock Exchange composite index lost 19.30 to 841.81 and the Russell 2000 index of smaller companies fell 2.94 to 432.80. The Treasury's 10-year note rose 932 to 102132; its yield fell 4 basis points to 4.74 percent.The 30-year bond rose 1032 to 1012232; its yield fell 2 basis points to 5.26 percent.

The market's litany of grim numbers "points out how much damage has been done, and how we have gone from irrational exuberance to irrational depression," said Alfred E. Goldman, director of market analysis for A.G. Edwards & Sons in St. Louis.

While the falling tech sector landed in bear market turf last year, Wall Street has been debating whether the broader market has also become bearish, or has just dipped into bear territory. The S&P 500 officially entered a bear market on March 12.

The Dow, which until last week was able to resist the heavy selling that decimated the Nasdaq, has fallen to bear levels because investors believe the economy is getting much weaker, severely hampering even the most stalwart companies.

"This is about a market that is forecasting a recession," said Gary Kaltbaum, market technician for First Union Securities. "I know a lot of people are saying we are not in a recession, but remember, 12 months ago people were saying technology was great and wasn't going anywhere but up."

The Dow began its plunge last week when the market's fears of a recession widened to include the possibility of a halt in growth globally, especially given news that Japan is in a state of deflation and that the country's banking system is burdened by debt.

Investors who simply have little incentive to buy sold blue chips on a deepening conviction that a recovery for the economy and corporate earnings is unlikely to take place any time soon, particularly if demand for U.S. goods and services slumps abroad as well.

The market also remains irritated by the interest-rate cut the Federal Reserve made Tuesday. Investors, who wanted the Fed to reduce rates by 0.75 percentage point, don't think the 0.5 point reduction will be enough to boost earnings and the economy.

A new report showing the economy has further slowed added to investors' sour mood.

Economic activity fell 0.2 percent in February, according to the Conference Board. The New York-based private research group said its Index of Leading Economic Indicators fell to 108.8 last month after gaining a revised 0.5 percent in January.

Overseas, the deterioration of the U.S. market continued to affect other major indexes. In Tokyo, the Nikkei shed 249.97 points, or 1.91 percent, to close at 12,853.97, after having risen 912.97, or 7.49 percent, yesterday. In London, the FTSE 100 index plunged 4.1 percent, or 225.90 points, to 5,314.80. In France, the CAC 40 index lost 4 percent, or 198.94 points, to 4,824.82. In Germany, the DAX index fell 4.2 percent, or 234.07 points, to 5,388.02. In Hong Kong, the Hang Seng index sank 4.1 percent, or 532.59 points, to 12,621.85.