New York Stocks dropped sharply in volatile trading Wednesday, slicing more than 400 points off the Dow Jones industrials before bargain hunters moved in and helped the market recover most of its losses.
Investor despair over a generally bleak earnings outlook brought the Dow to its first close below 10,000 since March 14, although the blue chips managed to regain more than 300 points during the course of the day. The tech-focused Nasdaq composite index ended with a moderate loss, but also rebounded smartly from its lows of the session.
A disappointing earnings report from IBM was the catalyst for Wall Street's latest sharp decline.
"I think we are near the bottom, but this is a bottom that's going to need some credibility," said Brian Belski, a market strategist at U.S. Bancorp Piper Jaffray, who said bargain hunting, not any resolution of market problems, was responsible for the upturn. "There are still doubts about earnings growth rates and there are going to be doubts about the rally and reversal today."
The Dow closed down 114.69 at 9,975.02, largely because of a huge drop in IBM. An early decline of more than 433 points sent the Dow to its lowest intraday trading level since March 24, 1999.
The Nasdaq fell 42.40 to 3,171.56, bobbing in and out of positive territory after rebounding from a nearly 188-point slide in the first hour.
Several high-tech firms releasing earnings after the market closed had a more muted response from traders than IBM had Tuesday, when it plunged in after-hours dealings.
Microsoft, which beat Wall Street estimates by 5 cents a share, was up $3.13 at $54.88 in late trading, extending its $1.31 regular session gain.
America Online rose $2.09 to $49 in late trading, up from its regular session close of $46.91, after reporting earnings in line with expectation.