Dow falls below 12,000, but finishes ahead

Wall Street gyrated and then steadied itself Wednesday, closing with a respectable advance although the Dow Jones industrials fell as much as 136 points and briefly dropped below the 12,000 mark before recovering.

Stocks bounced back and forth a day after concerns about faltering subprime mortgage lenders sparked a broad selloff. H&R Block Inc. had added to Wall Street’s uneasiness by announcing after the closing bell Tuesday its fiscal third-quarter losses would rise because of a $29 million writedown at its mortgage arm.

The anxiety over mortgage lenders, particularly the subprime lenders that make loans to people with poor credit, pushed the Dow down by more than 240 points Tuesday, its second-biggest drop in nearly four years. Such concerns jostled stocks for much of Wednesday’s session.

“I think the market got below 12,000 and buyers came in,” said Todd Leone, managing director of equity trading at Cowen & Co.

The Dow rose 57.44, or 0.48 percent, to 12,133.40.

The Dow first climbed above the 12,000 level on Oct. 18, after a meandering, 7 1/2 year journey from the 11,000 mark. During that time, Wall Street dealt with the dot-com bust, recession and the aftermath of the 2001 terror attacks. Tuesday’s drop echoed a 416-point drop in the Dow seen two weeks ago that began in part after a nearly 9 percent drop in stocks in Shanghai and amid concerns about subprime mortgages.

Broader stock indicators also rose Wednesday. The Standard & Poor’s 500 index advanced 9.22, or 0.67 percent, to 1,387.17, and the Nasdaq composite index rose 21.17, or 0.90 percent, to 2,371.74.

Bonds fell as stocks bandied about; the yield on the benchmark 10-year Treasury note rose to 4.52 percent from 4.50 percent late Tuesday. Gold prices fell.

Light sweet crude settled up 23 cents at $58.16 per barrel on the New York Mercantile Exchange.

“I think people right now don’t know what to make of this market,” said Larry Peruzzi, senior equity trader at The Boston Company Asset Management. “You look like a hero right now if you bought when the Dow was down 120 points and if you sold you look like a goat.”

Peruzzi said stocks recovered after indexes neared technical levels and that the higher close in crude prices lent a boost to energy stocks. Exxon Mobil Inc. rose $1.11 to $71.02, while ConocoPhillips rose $1.32, or 2 percent, to $67.91.

After Tuesday’s big decline, the market appeared to have been awaiting further economic data — notably Thursday’s producer price index and Friday’s consumer price index — for signals about the economy’s health and whether an interest rate cut might be in the offing. Lower interest rates would make access to capital cheaper and perhaps inject strength in the housing market.

Wall Street’s turbulence came as stocks in Europe closed sharply lower, apparently seeing little room for optimism U.S. markets would rebound. Britain’s FTSE 100 fell 2.61 percent, Germany’s DAX index lost 2.66 percent, and France’s CAC-40 fell 2.52 percent. Japan’s Nikkei stock average closed down 2.92 percent, while Hong Kong’s Hang Sang index fell 2.57 percent and the sometimes volatile Shanghai Composite Index fell 1.97 percent.

The recent volatility in the U.S. markets has drawn concern from some investors grown accustomed to the calm conditions since U.S. stocks began their steep climb in July. Even before Wall Street’s recent uneasiness, volatility might have been expected to increase as the contract expirations near for stock index futures, stock index options, stock options and single stock futures. Such expirations can bring volatility as investors try to square their options and futures orders.

Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where consolidated volume came to 3.72 billion shares from 3.49 billion on Wednesday.

The Russell 2000 index of smaller companies rose 6.56, or 0.85 percent, to 775.68.