Stocks Nosedive, Then Recover Somewhat

Stocks plunged anew on Wednesday, with the S&P falling below the key 1,000-point level and the Dow dropping 423 points — but a late burst of buying pulled the indexes back to more presentable levels.

It was the market's second selloff in three days and it was spurred by news of thousands of job cuts at Boeing and other companies. The plunge ended a one-day reprieve for Wall Street, which had appeared steady Tuesday after a severe drop Monday.

The Dow Jones industrial average ended the day losing 144.27 points, or 1.6 percent, at 8,759.13, according to preliminary calculations. For the week, the Dow is down 746.81, or 8.8 percent.

Broader indexes also fell. The Nasdaq composite index dropped 27.42 at 1,527.66, a 1.8 percent loss, while the Standard & Poor's 500 index lost 16.66, or 1.6 percent, at 1,016.08.

The selling, while not entirely unexpected, was a blow to hopes that the market was steadying itself after Monday's huge selloff, in which the Dow fell a record 684 points and dropped below 9,000 for the first time in 2 years. Stocks held steady on Tuesday, with the Dow slipping only 17.

"I think the initial support and focus on patriotism by individual investors and the stock buybacks by companies earlier this week is now gravitating toward the uncertainty of the economy," said Tom Galvin, chief investment strategist at Credit Suisse First Boston. "There's no sense of urgency to sell or to buy at this point."

But Boeing's announcement late Tuesday of as many as 30,000 job cuts, as well as predictions of tough times ahead by Eastman Kodak and others, renewed the fears of investors already skittish about the market.

Sentiment also turned sour after the Federal Reserve said the U.S. economy remained "sluggish'' even before last week's attacks on New York City and Washington that have heightened fears the United States is headed for a recession.

"What's going on is rapid reductions in estimates for S&P 500 companies going forward,'' said Ralph Bloch, chief market analyst at Raymond James Associates. "A great deal of margin selling is going on, triggered by Monday's disastrous selloff,'' he said, referring to selling of stocks to cover margin calls from brokers. Many investors have bought stocks on margin, or with borrowed funds, only to see them fall.

Rattled investors now have more to be nervous about than the weak economy which had been dragging down stocks for weeks — namely, the prospect of war.

"I think the market right now is seized by fear rather than rationality,'' said Stanley Nabi, managing director at Credit Suisse Asset Management, who believes the sell-off is overdone and the U.S. economy will recovery next year. "I was bearish until a few days ago and now I am very clearly bullish. Rationality dictates this is the time to step in and buy.''

Almost 50 companies, including aerospace leader Boeing Co., media company Viacom Inc. and photo giant Eastman Kodak Co., have warned business would be hurt directly or indirectly by the attacks that toppled the twin towers and smashed part of the Pentagon near Washington. 

Eastman Kodak lowered third-quarter expectations and said more job cuts are inevitable. The world's largest photography company had announced in April it was cutting 3,500 jobs from a global payroll of 78,400.

Tech stocks, including Intel, also took a hit.

"I think market overall is bracing for higher unemployment," said Robert Streed, portfolio manager of Northern Select Equity Fund, who expects the markets to flounder for about a week before making any real progress.

Among the few winners Wednesday was telecommunications firm Verizon.

Also Wednesday, the Commerce Department reported that the U.S. trade deficit narrowed slightly to $28.8 billion in July as a big drop in imports of cars, oil and other foreign products offset the biggest fall in U.S. exports on record. The decline was a reflection of widespread weakness domestically and overseas.

Strategists pinned some of the volatility on Friday's ''triple witching,'' the simultaneous expiration of stock index futures, stock index options and stock options. Others blamed much of the market's three-day drop on a pervasive sense of loss on Wall Street.

Media conglomerate Viacom Inc., owner of the CBS television network, shed 90 cents to $31. The company said its earnings for the year would be lower than expected as non-stop news coverage of last week's attacks on the United States led to higher costs and a significant loss of advertising revenues. Boeing Co. reversed early losses to gain 25 cents to $33.39, offering support for the Dow.  

Diversified manufacturer Honeywell International Inc., off $2.61 at $25.90, and credit card giant American Express Co., down $1.28 at $26.10, extended Tuesday's slide on their warnings of weaker earnings in the wake of the attacks. 

ImClone Systems Inc. rallied $2.17 to $52.18 in heavy trading on the Nasdaq. Bristol-Myers Squibb Co., off 87 cents to $55.62, agreed to a $1 billion deal in which it will take a 20 percent stake in the biotech firm. 

Finnish telecom equipment maker Nokia added 78 cents to $16 after British bank HSBC upgraded the mobile phone giant to "add'' from "hold''. 

The Russell 2000 index fell 9.32 to 402.34. 

Germany's DAX index lost 3.9 percent, Britain's FT-SE 100 was down 2.6 percent, and France's CAC-40 was off 2.0.

Most Asian markets clawed back some recent losses on Wednesday after relative calm on Wall Street but nerves remained frayed as investors awaited America's response to last week's attacks. Tokyo stocks rose for a second day as investor jitters eased a little after concerted credit easing by major central banks, including Japan's. 

Reuters and The Associated Press contributed to this report.