The Bleeding Continues
A steep plunge took the Dow Jones industrial average down nearly 400 points and into bear market territory Thursday, before a stunning rally saved it from closing deep in the red.
However, the closely watched index of 30 industrial stocks still lost almost 100 points, bringing the total damage over the past 10 trading days to nearly 1,500 points, reports CBS News Business Correspondent Anthony Mason.
The blue chip index dropped to the 9,379 level in the opening minutes of trading, pulling the Dow down more than 20 percent from the closing high of 11,722.98 it reached on January 14, 2000. A drop of 20 percent is considered "bear market" territory.
The Nasdaq and Standard & Poor's have already entered the land of the bears.
Down more than 350 points at 3 p.m. ET, investors started buying Dow stocks, and the index ended the day lower by 97.52 points to close at 9,389.48. The S&P 500 slid 4.56 points to close at 1,117.58.
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On a day when recession fears were fierce, the only good news for the market was in tech stocks. The Nasdaq rose 67.47 to close at 1, 897.70
The rally of many tech stocks is a sign they may finally have bottomed out. Of course, with the Nasdaq down nearly 65 percent from a year ago, the climb back up could be a long one.
Despite the glimmer of hope in the tech sector, the market mood is still gloomy. Ricky Harrington of Wachovia Securities told CBS Radio News that the chances were good for another fall Friday.
"It's a dangerous situation," said Dan Ascani, president of market research firm GMSTechstreet.com. "It's dangerous to the economy, because the markdown in asset values on such broad levels marks down the net worth of consumers."
Feeding the fears Thursday were uninspiring reports on economic growth, news of new layoffs, lingering disappointment with the Federal Reserve's rate cut Tuesday — which was smaller than investors wanted — and touble in world markets.
"I think people are just concerned about a recession. I mean we've been talking about it for months and it seems like we might be on recession's doorstep," said Boyle.
The worries are weighing heavily on several leading stocks: American Express, J.P. Morgan Chase, Citigroup and Boeing have all plunged 20 percent or more in the past two weeks.
"Bear markets take no prisoners, which really effectively means … in bear markets generally speaking all stocks go down," said Hugh Johnson of First Albany. "Nobody escapes the damage."
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| A sign in Hong Kong reports Thursday's Hang Seng results. |
In one of the reports out Thursday, the Conference Board said economic activity fell 0.2 percent in February. The group provided little encouragement that the economy would rebound any time soon, but it did say slow growth would continue in the coming months.
Also, the Labor Department reported Thursday that initial applications for jobless benefits edged down by 1,000 to a seasonally adjusted 379,000 for the week ending March 17. Despite the decline, the figures were interpreted as showing a continuing drop in demand for workers.
Meanwhile, Procter & Gamble announced 9,600 layoffs, while discount broker Charles Schwab unveiled plans to slash its workforce by 13 percent.
Schwab is not the only ailing financial company. Lehman Brothers, Morgan Stanley Dean Witter and Bear Stearns have all seen their profits fall 28 percent or more from a year ago.
CBS MarketWatch reports faltering confidence about growth prospects overseas, as well. There was a sharp sell-off in many European and Asian stock markets before Wall Street's Thursday, although Japan's Nikkei posted a large gain.
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