NEW YORK >> Stunned by news of another accounting scandal, this time at WorldCom, investors sent stocks plunging today, with the Dow Jones industrials dropping as much as 200 points and below 9,000 for the first time since October. The Nasdaq composite index traded below its post-Sept. 11 closing low. WorldCom news
rattles marketBy Amy Baldwin
Associated PressYet the indexes managed to recover from their sharpest losses in the last hour of trading. The Dow pulled back above 9,000, suffering only a slim loss, while the Nasdaq eked out a small gain.
Analysts discounted the comeback, saying it was triggered by computer-generated buying set off by lower prices.
"We've had these reversals before, and here's another one," said Richard A. Dickson, technical analyst.
Declining issues outnumbered advancers 5 to 3 on the New York Stock Exchange. Volume was heavy at 1.99 billion shares, ahead of yesterday's 1.50 billion.
After falling as much as 200.25, the Dow closed down just 6.71, or 0.1 percent, at 9,120.11. The Dow sank 155 yesterday, its fourth triple-digit loss in the past five sessions.
The Dow hadn't traded below 9,000 since Oct. 10, and last closed below that milestone on Oct. 2, when it reached 8,946.56. At that time, the market was recovering from the Sept. 11 terrorist attacks.
The broader market ended mixed today. The Nasdaq rose 5.34, or 0.4 percent, to 1,429.33. For much of the day, the Nasdaq traded below its post-Sept. 11 closing low of 1,423.19, reached Sept. 21. The Russell 2000 index, the barometer of smaller company stocks, rose 0.52, or 0.1 percent, to 452.97. Meanwhile, the Standard & Poor's 500 index fell 2.61, or 0.3 percent, to 973.53, also trading much of the session below its Sept. 21 low close of 960.63.
The price of the Treasury's 10-year note was up 19/32 point today, while its yield fell to 4.74 percent from 4.82 percent late yesterday. Two-year Treasury notes were up 1/8 point and yielded 2.76 percent, down from 2.83 percent yesterday.
An announcement from WorldCom that it disguised $3.8 billion in expenses last year and early in 2002 shook a market already mistrustful about corporate accounting following the collapse of Enron Corp. and revelations of bookkeeping irregularities at other companies.
The Federal Reserve's decision to leave interest rates unchanged had little effect on trading. The market had expected the Fed to leave rates alone given the sluggish economic recovery. WorldCom did not trade today. But telecommunications stocks were weak with AT&T declining 33 cents to $9.62. The financial sector fell on investors' concerns that banks would lose money on WorldCom loans, estimated at $2.6 billion. Citigroup sank $2.12 to $37, while Bank of America fell $2.58 to $67.45.
Overseas, stocks fell with Japan's Nikkei stock average finishing down 4.0 percent. In Europe, France's CAC-40 lost 1.7 percent, Britain's FTSE 100 sank 2.2 percent, and Germany's DAX index fell 2.5 percent.