Chaos Ends With Bulls Ahead

Updated from 4:17 p.m. EDT

Stocks in New York endured a wild back-and-forth trading session Wednesday, but at the end of it all the bulls were able to claim the victory.

After falling as many as 80 points in the morning, the Dow Jones Industrial Average rallied late in the afternoon, scaling nearly 200 points in the last hour. The index closed higher by 150.38 points, or 1.14%, to 13,362.37, completely reversing the previous session's losses.

The S&P 500 added 10.54 points, or 0.72%, to 1465.81, and the Nasdaq Composite rose 7.60 points, or 0.3%, to 2553.87.

"On a relative basis this really wasn't more than a dead-cat bounce, as a 150-point recovery isn't much compared to our recent slide," cautioned Larry Wachtel, senior market analyst with Wachovia Securities. "This type of action should be expected, especially after the Dow fell nearly 800 points from its record high. When valuations are taken down by that extreme, this snap-back was due."

Michael Sheldon, chief market strategist with Spencer Clarke LLC, said the most likely reason stocks had such a strong finish was due to computer program-related trading.

"Based on the fact that 75% of the S&P 100 closed higher today vs. just 55% of the Russell 2000 and only 32% of a Bloomberg index of recent IPO's, the late-day rally on Wall Street most likely reflects strong late-day buy programs along with short-covering by investors betting on a continued slide in stock prices," he said.