Despite a near triple-digit loss, blue-chip investors probably felt thankful at the session close Thursday. After plunging almost 400 points and into bear territory - defined as a 20 percent fall from the recent high - the Dow Jones Industrial Average staged a modestly impressive run-up at the end of trading that made up for much of the day's losses. An even steeper late-day rally put the Nasdaq, which had been teetering in the red most of the day, squarely in the black.
Although both indexes posted optimistic mini-rallies at the end of the day, few analysts think the action is a genuine sign that things have turned around. The Dow, after all, has been trounced for the past three days and the Nasdaq ... let's not even think about it.
"After three days of pummeling, the Dow is entitled to get a little back," said Phil Rettew, a senior market analyst at Merrill (MER) Lynch. "It's like a rubber band. If you stretch it too far, it will snap back."
Tech stocks, as measured by the Nasdaq, posted a significant gain in the late afternoon, although the earlier part of the day was characterized by a lack of conviction. Dips would bring in bargain hunters and profit-taking would start whenever the index ticked higher. But boosted by the semiconductor sector, the Nasdaq climbed to almost 1900 by the close. Still, it may only be a pause, and not necessarily one that will refresh the clearly knackered index.
"We may be seeing a temporary bottom," said Bill Schaff, a fund manager at Bay Aisle Financial. But human fear doesn't change very quickly. It took us 15 months to let the air out of the bubble and it will be a while before we are built back up again,"The Nasdaq closed up 67.47 points, or 3.69 percent, at 1897.70. The Dow, despite the late rally, slid 97.52, or 1.03 percent, to 9389.48. The broader S&P 500 fell 4.56 points, or 0.41 percent, to 1117.58. The Industry Standard 100 closed up 13.22 points, or 3.75 percent, to 365.22.
Chipmaker Intel (INTC) led the charge for tech stocks on the Nasdaq. Despite comments by the company's CEO that the next quarter didn't look bright and that there was little visibility beyond that, the stock powered higher. Shares rose US$3.13, or 12.22 percent, to close at $28.69. "It's usually a positive sign when the stock refuses to go down despite bad news," Rettew said.
Microsoft (MSFT) also posted a strong gain despite an earnings revision from investment house Goldman Sachs. The world's largest software maker was up $3.94, or 7.87 percent, to $54. Database software maker Oracle (ORCL) was up 5 percent, computer server maker Sun Microsystems (SUNW) was up almost 3 percent, while router maker Cisco (CSCO) was up about 2 percent.
The Dow didn't look as good. General Electric (GE) , the day's most-active issue on the New York Stock Exchange lost $1.30, or 3.33 percent, to close at $37.70. Financial services giant Citigroup (C) was off $1.65, or 3.91 percent, to $40.60.