Updated from 3:50 p.m. EDT
Blue chips used a late push to overcome steep losses and tech stocks finished well above their session lows Wednesday in New York.
Dow Jones Industrial Average
ended with a loss of just 0.98 point at 13,675.25. Earlier, it had been down nearly 200. The
was off 3.71 points, or 0.2%, at 1515.88, and the
gave back 24.50 points, or 0.9%, to 2774.76.
Less-than-perfect results from
and a mammoth writedown at
( MER) had stocks deep in the red for much of the trading day, but a little after 2 p.m. EDT, the market approached its prior session lows and then began to reverse course.
Reporter Mark DeCambre says Merrill's move wasn't shocking
Despite the indices general recovery, both those names remained to the downside. Merrill fell $3.90, or 5.8%, to $63.22 after saying the subprime mortgage mess over the summer forced it to take a $7.9 billion
writedown for bad debt.
The firm swung to a third-quarter continuing-operations loss of $2.24 billion, or $2.85 a share, from a year-ago profit of $3.05 billion, or $3.14 a share. Revenue plunged 94% from a year ago to $577 million.
Another soft spot was Amazon. After the close, the Internet retailer beat third-quarter forecasts by a penny as revenue jumped 41% from a year ago. However, gross margin declined when compared with the second quarter, and shares tumbled 12% to $88.73.
Amazon's report came at the same time that chipmakers
delivered dispiriting reports, putting a crimp on recent tech optimism. Altera and Broadcom spiraled 15.7% and 17% lower, respectively.
With those losses, the chip sector was the worst performer of the session, and the Philadelphia Semiconductor Sector Index sank 3.6%. The Nasdaq Financial 100 Index and the NYSE Financial Sector Index were losers as well, down roughly 1% each.
As for the gainers, the Amex Oil Index was higher by 1%, and the Philadelphia Oil Service Sector Index was better by 0.8%.
Breadth was weak. On the
New York Stock Exchange
3.68 billion shares changed hands, as decliners topped advancers by a 5-to-3 margin. Volume on the Nasdaq reached 2.74 billion shares, with losers beating winners nearly 7 to 3.
As the market came off its lows, reports on television and the Internet said traders got interested in buying after passing around speculation that the
might be considering another rate reduction. There was no indication that the chatter was anything other than a rumor, but that doesn't mean investors wouldn't like to see one.
"The Fed should cut anyway, so if they make the move early it won't make any difference," said Paul Mendelsohn, chief investment strategist with Windham Financial. "The probability of the credit problem becoming more systemic is certainly worrying the Fed. There are companies out there with bigger problems than Merrill Lynch, so needless to say the Fed needs to let the market know the last rate cut wasn't a 'one-and-done' event. This issue needs to be contained."
Aside from the earnings, investors also were handed more bad news about the housing market from the National Association of Realtors. The NAR said that existing-home sales fell a greater-than-expected 8% in September to an annual rate of 5.04 million units, considerably worse than expectations.
Ian Shepherdson, chief economist with High Frequency Economics, said the latest housing data will force the Fed to lower the fed funds rate by 25 basis points when it meets next week.
"Prices will keep falling. The housing crunch is accelerating," he said. "The Fed can't stand by and watch."
Following the housing data, Treasury securities rallied. The 10-year note was up 16/32 in price, cutting the yield to 4.34%. The 30-year bond added 26/32 in price, yielding 4.64%.
While Amazon and Merrill were hogging the earnings spotlight, plenty of other companies were out with reports.
and tech giant
both beat Wall Street's estimates for the current quarter, but each offered sluggish guidance. Corning dropped 6.2% to $23.20, and shares of Boeing slumped 0.7% to $94.26.
also notched an earnings beat and boosted its forecast for 2007.
met expectations for the third quarter and guided higher for the fiscal year.
Northrop added 3.4% to $82.25, and Coca-Cola Enterprises finished higher by 2% at $25.
came in ahead of their respective Thomson First Call consensus estimates.
posted an earnings decline from a year ago but still exceeded forecasts.
Crude futures rose after an unexpected decline in inventory levels. The Energy Department said that crude stocks dropped by 5.3 million barrels last week. Gasoline and distillate inventories also fell, compared with expectations for slight gains. The December front-month crude contract jumped $1.83 to close at $87.10 a barrel.
Overseas markets were uniformly lower. In Asia, Hong Kong's Hang Seng eased 0.2% overnight, and Japan's Nikkei 225 was off 0.6%. In Europe, London's FTSE 100 was down 0.5%, and Germany's Xetra Dax was 0.2% lower for the day.