Fed-Induced Selling: Take Three

For the third straight day, major stock proxies fell sharply after inflation warnings from a Fed official. But in contrast to the prior two days, some last-minute bottom-fishing helped the indices recover most of the lost ground by the close. But a selling bias and negative sentiment clearly dominated Thursday's session.

The Dow Jones Industrial Average finished down 30.26 points, or 0.3%, at 10,287.10, after earlier sinking to as low as 10,218.09. Still, the Dow has lost 350 points, or 2.7%, so far this week. Notable laggards among Dow components included Caterpillar (CAT Quote), Altria (MO Quote) and Hewlett-Packard (HPQ Quote).

Several stocks helped cushion the losses for the blue-chip average on Thursday, including Wal-Mart (WMT Quote). The retail giant said same-store sales rose 3.8% in September and expects an increase of 2% to 4% for October. General Electric (GE Quote) also gained after raising its earnings guidance. ...