NEW YORK (AP) Despondent investors intensified their selloff of blue chip stocks yesterday, accelerating the decline in the Dow Jones industrial average and narrowly avoiding bear market territory.
- Paul Wong
- Trader Robert Brooks holds his finger to his mouth watching the numbers from the floor of the New York Stock Exchange yesterday<br><br>AP PHOTO
A last-hour rally allowed the Dow to recover somewhat, but the index still closed with a loss of nearly 100 points.
Investors are in “deep despair,” said Hugh Johnson, chief investment officer for First Albany Corp. “There is a sense of giving up. They are extraordinarily depressed and demoralized.”
The Dow, which dropped by triple digits in six of the past nine trading sessions, tumbled to the 9,379 level in the opening minutes of trading, putting the blue chip index down more than 20 percent from the closing high of 11,722.98 it reached on Jan. 14, 2000. A decline of 20 percent is considered bear market territory.
The Dow continued to slide in a heavily traded session, falling more than 380 points. It regained some ground in the final hour and closed down a more moderate 97.52 at 9,389.48.
Yesterday”s loss means the Dow, which last week suffered its worst-ever weekly point drop, has fallen 1,468.77, or 13.5 percent, over the last 10 trading sessions.
Broader market indicators were mixed.
The Nasdaq composite index, down more than 62 percent from its own high of 5,048.62 reached March 10, 2000, advanced 67.47 to 1,897.70.
The market”s broadest measure, the Standard & Poor”s 500, finished down 4.56 at 1,117.58, having made a last-minute recovery of its own. The S&P 500 has lost more than a quarter of its value since peaking at 1,527.46 a year ago.
Despite the late recovery, the market”s litany of grim numbers “points out how much damage has been done, and how we have gone from irrational exuberance to irrational depression,” said Alfred E. Goldman, director of market analysis for A.G. Edwards & Sons in St. Louis.
According to traditional measures, a bear market occurs when there is a drop of 20 percent over a sustained period. While the tech sector landed in bear market turf last year, Wall Street has been debating whether the broader market has also become bearish, or has just dipped into bear territory. The S&P 500 officially entered a bear market on March 12.
The Dow, which until last week was able to resist the heavy selling that decimated the Nasdaq, has fallen to bear levels because investors believe the economy is getting much weaker, severely hampering even the most stalwart companies.
“This is about a market that is forecasting a recession,” said Gary Kaltbaum, market technician for First Union Securities. “I know a lot of people are saying we are not in a recession, but remember, 12 months ago people were saying technology was great and wasn”t going anywhere but up.”
The Dow was able to curb its losses as the Nasdaq advanced on a rebound in deeply discounted tech stocks. Still, Kaltbaum said, it”s doubtful the Dow will be able to sustain a recovery for quite some time.
“You had to bounce from somewhere,” he said. “The Dow is in bad shape no matter what.”