Dow ends wild day with gain of almost 300
NEW YORK -- Stocks pulled off a stunning comeback Wednesday, surging higher in late trading and wiping out what looked to be another precipitous decline. The Dow Jones industrials, down more than 323 points in earlier trading, ended the day with an advance of just under 300 points.
A day after the Dow Jones industrial average mounted a comeback from a 464-point drop, the blue chip gauge plunged almost 264 points at the open of trading and was off as much as 323 points. It closed up 298.98 points, or 2.5%, at 12,270.17.
The Standard & Poor's 500 index rose 28.10, or 2.1%, to 1338.60 and the Nasdaq composite index rose 24.14, or 1.1%, to 2316.41.
Stocks were originally hurt by tepid comments from Apple aapl about future business prospects, which exacerbated recession fears and renewed fears that the U.S. consumers will pare their spending.
Investors are still debating whether the surprise three-quarter point interest rate cut from the Federal Reserve on Tuesday was a sign that the economy is in worst shape than people thought — or whether the shock treatment to boost the economy will continue to provide stability in global financial markets.
Investors were disappointed with Apple, which after the closing bell Tuesday issued a less-than-enthusiastic outlook for profits in coming quarters. Apple, of course, was among the stock market's big winners last year and has emerged as a barometer of consumer health, given that its gadgets such as iPod and iPhone are among consumers' favorite toys. A weak outlook by Motorola mot also gave investors pause.
"With Apple being the best of breed and having all the right stuff, if they are not seeing demand, that means investors are taking out the best of the best," says Todd Clark, director of listed trading at Nollenberger Capital Partners .
The fact that the European Central Bank did not lower interest rates overnight in the wake of the Fed's rate cut Tuesday also was viewed negatively by investors who were looking for a coordinated rate-cut plan.
"Investors think we need global easing to help thwart a recession," says Andy Brooks, head trader at T. Rowe Price, a large mutual fund company.
The early weakness on Wall Street dragged the Nasdaq composite into official bear market territory, defined as a drop of 20% or more from a high.
Still, all the recent selling has created some investment opportunities, says T. Rowe Price's Brooks.
"We are trying to be smart buyers," says Brooks, who adds a lot of the selling in the tech sector may be smart investors selling their big winners to raise cash to buy stocks that are now down big and which present value.
The key level professional investors are watching is the lows hit early Tuesday when panic selling was at its highest. If the market can stay above those levels, it could bring in buyers, says Clark. The Dow's low Tuesday was 11,634.82.
Asian shares rose overnight after Tuesday's cut, but European stocks dropped in a volatile market Wednesday after European Central Bank President Jean-Claude Trichet appeared unmoved by the Federal Reserve's decision to cut interest rates, according to Dow Jones Newswires. Some investors had hoped the ECB would signal willingness to cut rates.
Britain's FTSE 100 closed down 2.3%, Germany's DAX index fell 4.9%, and France's CAC-40 fell 4.3%.