Stocks slip but pare big losses
EmptyNEW YORK-- A still skittish Wall Street closed modestly lower Thursday, having clawed its way back from an early-session plunge after upbeat manufacturing data allayed fears about a flagging U.S. economy.
The Dow Jones industrials ended 34 points lower after tumbling 209 points in early trading and then briefly reaching positive territory in the afternoon.
Investors, relieved that manufacturing is still expanding, bought some of the stocks pummeled in Tuesday's drop, which sliced 416 points off the Dow. The blue chip index is now down about 400 points, or 3.2%, from its closing level Monday, having rebounded halfheartedly Wednesday on calming words about the economy from Fed Chairman Ben Bernanke.
The Institute for Supply Management's index of February manufacturing activity came in at 52.3, stronger than the 50.0 reading analysts expected. The index is an important measure of a part of the economy that has given investors headaches in recent months. Manufacturing had contracted a month earlier, according to the index, suffering from the listless housing market and hard-up auto industry. A reading at 50 and above indicates expansion, while anything below 50 signals contraction.
The ISM data helped the market regain lost ground, but anxiety still plagued the Street, with the indexes bouncing around choppily as many investors bailed out of equities and fled to safe havens like Treasurys, betting that stocks have further to fall.
The Dow fell 34.29, or 0.28%, to 12,234.34, after dropping as low as 12,056.54 in the first hour of trading. It hasn't traded at these levels since early December.
Broader stock indicators also ended down after fluctuating in the afternoon. The Standard & Poor's 500 index fell 3.65, or 0.26%, to 1,403.17, after tumbling 26 points earlier in the day.
The technology-dominated Nasdaq composite index finished down 11.94, or 0.49%, at 2,404.21, following an earlier drop of 56 points.
Stocks plunged Tuesday amid escalating worries that the U.S. and Chinese economies are slowing, exacerbated by a huge decline in Chinese stocks and comments from former Fed Chairman Alan Greenspan that a U.S. recession is a possibility. A day later, they managed an anemic recovery as Bernanke predicted the U.S. economy would continue to grow moderately.
The market appears to be trading in a pattern similar to past downturns: dropping sharply one day, regaining some ground the next and then resuming its slide, waffling due to investors' inability to recoup their lost conviction in stocks.
Bond prices rose on weak stocks Thursday, pushing the yield on the benchmark 10-year Treasury note to 4.55% from 4.57% late Wednesday.
Gold prices fell, while the dollar rose against most major currencies, with the exception of the Japanese yen. The dollar has been losing ground to the yen, as traders unwind yen "carry trades" -- borrowing the low-yielding yen to invest in the higher-yielding dollar, a technique that many market watchers say accelerated the U.S. market's recent decline. The dollar traded at 117.59 yen at the stock market's close on Thursday, down from Wednesday's levels but up from an earlier low of 116.94.
U.S. investors began the day rattled by another series of declines in Asian and European markets.