Dow Falls 293 as Investors Cash Out

NEW YORK (AP) -- Stocks pulled back Wednesday as investors cashed in gains a day after the market's huge rally and digested better-than-expected results at Morgan Stanley that eased concerns about the investment banking sector. The Dow Jones industrials at times gave up more than 200 points.

Traders crowd the post that will trade Visa Inc. as they wait for the company's IPO to start...

Traders crowd the post that will trade Visa Inc. as they wait for the company's IPO to start trading, Wednesday, March 19, 2008. Visa Inc. shares soared more than 30 percent in their stock market debut Wednesday as investors latched on to the largest initial public offering in U.S. history.

(AP Photo/Richard Drew)

News that the government plans to free up billions of dollars at Fannie Mae and Freddie Mac, a move that could help struggling homeowners, initially appeared to quell some of the market's fears. But it couldn't stave off selling late in the session by investors who have seen big advances evaporate many times during the course of the credit markets crisis and decided to preserve some of their gains.

Investors sent stocks charging higher Tuesday on stronger-than-expected investment bank results and several moves from the Federal Reserve in recent days, including a 0.75 percentage point rate cut aimed at jump-starting the credit markets. The Dow rose 420 points, its second 400-plus point gain in six sessions.

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Morgan Stanley's earnings indicated that the bank is relatively healthy like Lehman Brothers Holdings Inc. and Goldman Sachs & Co., rather than at risk of failure like Bear Stearns Cos. JPMorgan Chase & Co. struck a deal Sunday to acquire Bear Stearns, which was on the verge of succumbing to credit troubles.

George Shipp, chief investment officer at Scott & Stringfellow, said that some investors are still uneasy about the health of the markets. He contends the back-and-forth days will likely continue as Wall Street tries to feel its way forward.

"Nobody wants to make the first move. There is liquidity on the sidelines. It doesn't really know what to do right now," he said, adding that investors are trying to determine whether moves by the Fed and other regulators to stimulate the economy and stabilize the markets will take hold.

"Clearly there is fear. I would say the needle is pointing more toward fear than greed right now," he said.

In late afternoon trading, the Dow fell 211.01, or 1.70 percent, to 12,181.64.