SAN FRANCISCO -- An overseas storm cast a pall over Wall Street this morning, but the calming influence of dip buyers left those looking for a big selloff all wet.
Some rain fell today as major proxies ended mixed and market internals reflected a negative bias. But the declines were modest relative to
early indications, bringing cheer to most market players.
Cheer was the furthest thing from traders' minds this morning (save those short). After a government report showed Japan's fourth-quarter
declined 1.4%, the
fell 2.8% and Hong Kong's
Hang Seng Index
dumped 4.1%. That led to a selloff in
Europe and huge losses for major U.S. averages in
futures trading, including a
limit down decline for the
futures. The futures set the stage for a big downward move when the cash markets opened at 9:30 a.m. EST.
Jim Volk, co-director of institutional trading at
in Portland, Ore. noted that "people are looking for an excuse to get spooked."
With the prospects of more
rate hikes, countless articles about insane valuations (and the valuations themselves), and/or comments about crashes from market sages such as
having failed to spook traders, the overseas action provided another alternative today.
But after hitting as low as 9735.54 in the opening moment of trading, the
Dow Jones Industrial Average
rebounded steadily to climb as high as 9998.55 until the rally stalled in the final hour of trading. The Dow closed up 18.31, or 0.2%, to 9947.13.
Market players were unable to pin the reversal on any single event.
"It's just that people aren't buying the crash
scenario yet," said one hedge fund source, who requested anonymity. "People didn't believe it's time for stuff to go down. I took it as typical -- the market gets hit and people say 'ooh, it's time to get in,' rather than 'it's time to get out.' There's a lack of panic."
The Dow's comeback was fostered by strength in
Procter & Gamble
-- recovering from last week's huge decline,
rose 1.7% after
upped its recommendation to strong buy from buy.
The chip giant's performance helped the
Nasdaq Composite Index
recover from its initial decline to as low as 4839.26
, which rose 6.6% after three brokerages upped their recommendations, also helped stem the Comp's decline.
But the tech-before-dishonor index never traded in positive territory and stumbled into the close. After trading as high as 5027.73, it finished down 141.30, or 2.8%, to 4907.32.
The Comp's decline was fostered by tech giants such as
, as well as recent high-flyers such as
slid 8.2% on news it will acquire
, which rose 13.8%.
Additionally, biotech stocks stumbled, led by
, which fell 23.2% after reporting disappointing test results for a drug intended to treat coronary artery disease. Separately,
shed 18.2% after the
Food & Drug Administration
told the company to suspend production of its flu vaccine.
Other biotech names fell in sympathy, including
American Stock Exchange Biotech Index
Internet favorites also proved a negative influence on the Comp;
TheStreet.com Internet Sector
index slid 27.34, or 2.1%, to 1292.97.
Among broader market averages, the
finished down 11.45, or 0.8%, to 1383.62 but well off its initial low of 1364.84. The
fell 13.67, or 2.3%, to 590.14, reflecting the negativity of market internals.
New York Stock Exchange
trading, 996.3 million shares were exchanged while declining stocks led advancers 1,861 to 1,158. In
Nasdaq Stock Market
action 1.69 billion shares traded while losers led 2,864 to 1,454. New 52-week lows bested new highs 211 to 39 on the Big Board and by 166 to 159 in over-the-counter trading.
Feeling Good About the Decline
At day's end, few market participants were lamenting the inability of major proxies to sustain intraday heights.
"I think what's more important here is we didn't tumble a bunch," said Robert Christian, chief investment officer for
in Delaware. "I was anticipating a pretty awful day. Tech stocks suffered a big falloff, but I attribute that mostly to a technical correction. We hit 5000 last week and stocks had risen tremendously. It's a normal correction."
The slide in tech names "represents an opportunity," Christian said. "Even though a lot are selling at big-time multiples, they are rapid growers -- not just a once and done deal."
, which fell 4% today, as an example. Wilmington Trust is long JDS Uniphase.
While bullish on tech, the investment chief recommends investors maintain a portfolio balanced among blue-chips, tech, small-caps and international names.
Other names he's recommending (and is long) include
Johnson & Johnson
Protein Design Labs
"Owning tech stocks is great
and you have to be there. But it shouldn't be your only investment," he said.
Among other indices, the
Dow Jones Transportation Average
rose 26.65, or 1.1%, to 2391.94; the
Dow Jones Utility Average
slid 1.17, or 0.4%, to 276.57; and the
American Stock Exchange Composite Index
shed 14.47, or 1.4%, to 1018.86.
The price of the 10-year Treasury note rose 6/32 to 100 31/32, its yield dipping to 6.37%.
Market data above are preliminary. For coverage of today's top stocks in the news, see the Company Report, published separately