Wall Street pulls back as investors cash in


POSTED: Wednesday, October 15, 2008

NEW YORK » Wall Street ended a relatively calm session with a moderate loss yesterday as investors, while pleased with the government's plans to spend $250 billion to buy stock in private banks, decided to cash in some of their profits from the previous day's massive advance.

It was the first time in nine sessions that the Dow Jones industrial average didn't close up or down in triple digits although it did swing in a 700-point range. The Dow closed down 76 points a day after its record 936-point jump.

Big advances by many bank stocks helped offset some of the declines in the Dow and the Standard & Poor's 500 index, giving them a better showing for the day than the Nasdaq composite index, which fell more than 3 percent. But the Nasdaq, dominated by technology stocks, also lagged ahead of a profit report from Intel Corp.

Profit-taking started creeping into the market after the Dow surged more than 400 points at the opening. Wall Street is expected to see jittery trading in the weeks and perhaps months ahead because of worries about the economy; stocks also tend to ratchet up and down when they're recovering from a plunge like the one Wall Street has suffered in the past two weeks.

“;We don't know if the bottom is in,”; said Lincoln Anderson, chief investment officer and chief economist at LPL Financial in Boston, referring to the market's advance Monday after huge losses last week.

Investors had snapped up stocks Monday in anticipation of the government's plan. President Bush said yesterday the government will use a portion of the $700 billion financial bailout passed at the start of the month to inject capital into the nation's major banks, which have been slammed by souring mortgage investments.

Investors are hoping extraordinary steps by government officials will help resuscitate stagnant credit markets.

The Dow fell 76.62, or 0.82 percent, to 9,310.99.

The Russell 2000 index of smaller companies fell 16.24, or 2.84 percent, to 554.65.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 5.34, or 0.53 percent, to 998.01, and the Nasdaq composite index fell 65.24, or 3.54 percent, to 1,779.01.

Though the major indexes showed losses, advancing issues outnumbered decliners by about 9 to 7 on the New York Stock Exchange, where volume came to 1.88 billion shares.

Light, sweet crude fell $2.56 to settle at $78.63 per barrel on the New York Mercantile Exchange.

The dollar was mixed against other major currencies, while gold prices declined.

The Dow remains 34.3 percent below its Oct. 9, 2007 record close of 14,164.53, and could fluctuate around these levels as investors await signs of stabilization in the housing and job markets.

Following the Columbus Day holiday, the three-month Treasury bill's yield rose to 0.27 percent from 0.21 percent late Friday, and the 10-year note's yield rose to 4.07 percent from 3.86 percent.