Wall Street gave new meaning to the word "volatility" Tuesday, as stocks staged a dramatic comeback after investors took a breather from what some analysts deemed panic selling.
|Traders in the Nasdaq futures' pit at the Chicago Mercantile Exchange signal trades during a hectic morning session Tuesday |
The technology-laden Nasdaq was down 574.57 points at midday, then clawed back to finish down 74.79 at 4,148.89. From its high to its low, the Nasdaq moved more than 634 points.
The Dow rose 196.31 points Tuesday morning before careening to a
loss of 504.15 in early afternoon. It finished down 57.09 at
11,164.84, having made its way back to positive territory briefly
before turning lower once again. It swung more than 700 points
during the day.
Both were well above their session lows, which had taken the
Dow industrials down 504 points and the Nasdaq composite down 574 points.
Asian Markets Mixed
Tokyo stocks ended weaker on Wednesday as high-tech and Internet shares tracked a selloff in
their U.S. counterparts, but bargain-hunting in "old economy" stocks supported the downside, traders said. The benchmark Nikkei average eased 132.16 points or 0.64 percent to 20,462.77. The June futures contract fell 110 points to 20,500. Declining shares marginally outnumbered gainers 632 to 614, while 146 issues were unchanged on the first section of the
Tokyo Stock Exchange. Turnover was active at 744.87 million,
against Tuesday's 742.37 million.
Taiwan's stock index rose 1.35 percent to close up 135.74 points at 10,186.17 on Wednesday during a domestic market holiday as institutions snapped up electronics shares for their second-quarter portfolios.
The South Korean market was closed for a holiday.
Microsoft a Factor?
Although some downplayed the role of the Microsoft ruling in Tuesday's sell-off, some analysts believe Wall Street was still roiled by uncertainty about the software giant.
After Monday's close, a federal judge ruled that Microsoft broke U.S. antitrust law by abusing its monopoly in personal computer operating systems.
|Nasdaq traders at the Chicago Mercantile Exchange recover from a hectic afternoon session Monday |
Smaller technology shares, which have fallen prey to investors'
worries that their prices ran up too quickly in recent months, also slid
Tuesday, lending credibility to analysts' belief that
Microsoft wasn't solely responsible for the technology selloff Monday.
"In hindsight, technology shares had been ripe for a further
correction," said Scott J. Brown, chief economist at Raymond James
& Associates in St. Petersburg, Fla. "The Microsoft news merely
provided a handy excuse."
Despite the volatility, the White House said on Tuesday that U.S. economic fundamentals remain "very strong."
"We believe that the very fundamentals of our economy look
still very, very strong," Gene Sperling, chairman of the White
House National Economic Council, told reporters, repeating the
standard U.S. official line when faced with volatile markets.
Sperling declined direct comment on the sharp drops on Wall
Street, but suggested that both the old and the new economies are
in reasonable health.
"Almost all readings of the economy right now suggest that
the basic fundamentals in terms of low unemployment, high
percentage of people working, incomes rising above inflation,
strong investment, strong projections for growth with low
unemployment all are there," Sperling said.
"I think the new economy is doing quite well and I do not
think that one should judge the strength of the fundamentals of
our economy based on the movement of the market over a one-day
or even a one-month period," he added.
Securities and Exchange Commissioner Paul Carey agreed that U.S. equity markets remain attractive.
"I think the U.S. markets are attractive in terms of the number of great investment opportunities that are offered," Carey said after speaking at a panel discussion on
The Nasdaq, which rose nearly 86 percent in 1999, started out
the year at the same extraordinary velocity, rising 24 percent from
the close of 1999 to March 10. But since closing at a record
5,048.62 on March 10, the index has fallen sharply.
|Pedestrians stop and watch monitors outside the Boston Stock Exchange Monday as the Nasdaq composite index plummeted |
Initially, the Dow got a boost from the Conference Board's Index of Leading Economic Indicators, which fell 0.3 percent in February, the biggest monthly drop in more than four years. The decline in the index, a gauge of future U.S. economic activity, suggested that
rising interest rates have begun to take a toll.
Federal Reserve policymakers have raised rates five times since
last June to prevent the fast-growing economy from giving rise to inflation.
"The market has been dying for any sign of potential slowdown
and I guess they are taking this as that," said David Orr, chief
economist at First Union Corp. in Charlotte, N.C.
Reuters and the Associated Press contributed to this report