Dow Recovers From Steep Plunge

The stock market stormed back toward record levels Tuesday, adding more than 150 points to the Dow Jones industrial average as investors quickly decided that Monday’s tailspin was an over-reaction.

The Dow rose 153.80 to 7,758.06, moving within 40 points of Friday’s record mark and recouping most of Monday’s 192-point tumble, which was the biggest point-loss by the blue-chip average since the 1987 market crash.

Most broad-market indicators also bounded back from the previous session’s plunge, led by technology and drug stocks. The technology-rich Nasdaq market set a new high.

As in Monday’s downturn, most of Tuesday’s action took place in the final two hours of trading. But analysts found the volatility less than surprising with the market trading at such lofty levels and the second quarter quickly coming to a close.

“As long as this market is moving higher, the intensity and volatility will increase,” said Ricky Harrington, technical analyst at Interstate/Johnson Lane in Charlotte, N.C., noting the continuing flood of new money into mutual funds.

Advancing issues outnumbered decliners by a 9-to-5 margin on the New York Stock Exchange, where volume totaled 542.65 million shares as of 4 p.m., up from 492.70 million in the previous session.

Some of the stocks that moved substantially or traded heavily Tuesday:

NYSE

Integon, up 8-15/16 at 24-15/16.

General Motors Acceptance Corp., the automaker’s finance unit, agreed to acquire the money-losing auto insurer for $26 a share, or about $550 million, in cash.

Bristol-Myers Squibb, up 8-3/8 at 84-3/4.

An FDA panel on Monday recommended Bristol-Myers’ taxol as a treatment for AIDS-related Kaposi’s Sarcoma.

La Quinta Inns, down 1-5/16 at 21-11/16.

Bear Stearns downgraded the hotel company’s shares to “neutral” from “attractive,” the Dow Jones News Service reported.

NASDAQ

PacifiCare Health Systems class B, down 18-3/4 at 66-3/4

PacifiCare Health Systems class A, down 17-1/4 at 63-3/4

The health maintenance organization warned late Monday that it expects to report disappointing second-quarter results.

Cambridge NeuroScience, down 5-11/16 at 3-13/16.

The drug maker temporarily suspended trials for its Cerestat product for stroke victims because of concerns about the risks of the drug during an interim analysis of data collected on 368 patients in the trial.