Blue Chips Stage A Comeback
Stocks made a dramatic comeback from a 240-point plunge Thursday, ending slightly down after bargain hunters stepped in to staunch the frenzied selling.
The Dow closed down 9.78 points at 7,731 after dipping 240 points, or fewer than 100 points above this year's low of 7,400 set Sept. 1.Broader stock indicators, which were again taking a much bigger bruising than the Dow 30, ended lower. Technology, Internet and financial stocks suffered some of the biggest losses.
Analysts attributed the Dow's recovery to investors who were dismissing the day's jitters and instead looking for cheap stocks.
"If you think that the world is not going to end then you have big bargains out there," said Charles Pradilla, chief investment strategist at SG Cowen Securities Corp., a New York investment firm.
Analysts attributed the selling frenzy to this week's sudden nose dive by the dollar in currency trading. The dollar fell sharply again Thursday after sliding 8.1 percent on Wednesday against the Japanese yen, the biggest one-day drop in a quarter century.
Hedge funds, secretive ventures that invest for wealthy clients, were said to be unloading some of their riskier bets on the dollar, weighing down dollar-denominated investments including stocks and Treasury bonds. With the dollar dropping, there also is less incentive for foreigners to invest in U.S. stocks and bonds.
The U.S. currency has wilted on expectations of slowing U.S. economic growth, lower interest rates, and a sense that Japan might be making progress in reforming its banking system. Hedge fund short-covering of bets against the yen and Japanese bank repatriation of capital have also pressured the dollar.
The technology-heavy Nasdaq composite index was down 48.93 at 1,413.67.At one point, the index traded below 1,400 for the first time in 16 months. The index, which is populated by thousands of small companies, has plummeted nearly 250 points in just four days.
The Standard & Poor's 500 index was down 13.78 at 956.90, threatening to break below early January's lows.
Declining issues outnumbered advancers by more than a 4-to-1 margin on the New York Stock Exchange, where volume came to a blistering 1.1 billion shares, compared with 965.5 million Wednesday.
The NYSE composite index was down 7.48 at 477.20, and the American Stock Exchange composite index was down 22.02 at 563.75.
Overseas, Tokyo's Nikkei stock average fell 5.8 percent, Frankfurt's DAX index fell 5.8 percent, London's FT-SE 100 fell 2.7 percent, and Paris' CAC-40 fell 4.4 percent.