Market slides then settles
The stock market shaves some of its losses one day after suffering its worst single-day decline of the year.
The Dow Jones Industrial Average answered yesterday's 299-point decline by recovering nearly 60 points late in a highly-volatile day of trading. The Dow was down as much as 125 points before finishing higher at 8546.78.
Analysts couldn't predict when the market would rebound, though they saw some emerging signs of stability.
The tech-laden Nasdaq Composite Index also closed slightly higher at 1788.20 after shedding more than 65 points, or 3 percent, yesterday. The S&P 500 also finished the day higher.
Investors have turned bearish on stocks due to lingering doubts about the economic vitality of Asian economies, analysts said. Stalled corporate earnings and cautionary tones from Federal Reserve chairman Alan Greenspan have sent the markets into a funk. The Dow now is trading at its lowest level since early March, and the Nasdaq is at mid-June levels.
Tech stocks largely were a mixed bag today, but Sun Microsystems was among the biggest gainers on rumors--since deflated by analysts--that IBM was planning to buy the company. Sun stock closed up more than 5 percent at 47.8125.
After posting earnings yesterday, Cisco Systems finished up nearly 4 percent, while America Online dropped more than 3 percent after its quarterly earnings report. The online giant posted better-than-expected earnings but postponed reporting net profits. AOL is in discussions with the Securities and Exchange Commission about calculating special charges for the quarter.
Among Internet stocks, portals were mixed, with Infoseek and Excite higher, and Yahoo and Lycos closing lower.
Computer makers Apple Computer, Gateway, Dell Computer, and Hewlett-Packard also were up, while Compaq Computer closed down slightly.
Software makers Broderbund, Intuit, and IBM gained today, though Microsoft, and Netscape finished the day down.
The recent roller-coaster ride is leaving some technology analysts baffled.
"The market is disconnected from the fundamentals right now," said Lou Mazzucchelli, a PC analyst with Gerard Klauer Mattison. "Nothing has fundamentally changed with any of these companies. The good ones are still good, the bad ones are still bad, and yet the selling continues because of other macro issues."
Mazzucchelli said that he expects much of the current "sell" sentiment to reverse, but added that no one can say when just yet.
"Where is this money ultimately going to go? Is it going to stay in cash? I don't think so. Is it going to go into bonds? I don't think so," he said. "This money has got to come back [to the stock market]."
Sue Billat, a semiconductor analyst with BancAmerica Robertson Stephens, said today's downturn can be attributed to the Asian financial crisis finally affecting corporate profits in the traditional industrial markets.
"The broader markets are taking the hits on the realization of what has been hurting the capital equipment industry for some time," Billat said. "It's easy to acknowledge that the Asian financial crisis has happened, but the ramifications--like aftershocks from an earthquake--will continue to rumble through for months."
Many semiconductor companies closed higher today.
Billat said the gains, based on recent news that DRAM prices have stabilized, may be short-lived. Prices are holding steady because the supply side has been pinched off by some recent plant cutbacks and closures, rather than because demand is outstripping supply.