NEW YORK — Stocks ended a volatile session mixed Wednesday as late-day bargain-hunting erased earlier declines, helping the Dow Jones industrial average recover from an intraday loss of more than 160 points.
A series of negative factors piled on to discourage buyers — until prices fell so low that some investors decided to place a few bets.
Worries about interest rates, inflation, the situation in Iraq and uncertainty about what effect it might have on the presidential race, and the psychological impact of seeing the Dow drop well below 10,000 made for an “ugly” day on the market, said Bill Groenveld, head trader for vFinance Investments.
“Why should the buyers step up here now?” asked Groenveld. “Why try to catch a falling knife? They have much more room to push down. And I don’t see as many fund managers or institutional investors being pro-active in a rising rate environment. … Everybody is in a really reactive stage right now.”
The tech-dominated Nasdaq composite index fell 5.76, or 0.3 percent, to 1,925.59, after advancing nearly 2 percent on Tuesday. Still, the index closed well off its lows, having declined more than 2.5 percent earlier in the day.
The other gauges ended fractionally higher, bouncing back from steep declines. The Dow added 25.69, or 0.3 percent, to 10,045.16, coming back from a loss of 167.28. The Standard & Poor’s 500 index ended up 1.83, or 0.2 percent, at 1,097.28.
Although the major indexes had mostly recovered by the end of the session, low volume suggests many large investors are staying out of the market. At least some may be awaiting key inflation data — the producer and consumer price indexes — due later this week.
Investors once again ignored upbeat news, this time strong earnings from Cisco Systems Inc. and a bright forecast from Qualcomm Inc. This lack of enthusiasm is part of a worrisome pattern that goes back several weeks, even months, said Ken Tower, chief market strategist for Schwab’s CyberTrader.
“Traders and investors aren’t convinced things get better from here, that’s why the market goes down when good news comes out,” Tower said. “It’s as if people are saying, ‘OK, you’ve given me good news, but what’s next?’.”
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