Stocks End Dismal Day With Late Rebound

Stocks ended a roller-coaster session with a late rebound Thursday, led by high-tech shares, as some investors hunted for bargain-priced stocks amid lingering questions over corporate credibility.

The Dow Jones industrial average ended down 11.97 points, or 0.14 percent, at 8,801.53, after trimming an earlier loss of 2.3 percent. On Wednesday, the blue-chip gauge suffered its largest one-day percentage loss since September 2001.

The Nasdaq Composite climbed 28.45 points, or 2.11 percent, to 1,374.46, according to the latest available data, after falling 1.6 percent earlier in the day. The tech-packed index had ended Wednesday at its lowest level since May 1997. Intel jumped $1.44, or 8.6 percent, to $18.25.

The Standard & Poor's 500 index rose 6.85 points, or 0.74 percent, to 927.32, erasing an early loss of more than 2 percent. The key index hit its lowest level since October 1997 a day earlier.

The Russell 2000 index, the barometer of smaller company stocks, fell 5.65, or 1.4 percent, to 414.13.

Supportive comments from Barton Biggs, one of Morgan Stanley's top strategists and a vocal bear during much of the market's rise three years ago, underpinned the market, traders said.

"Some of these stocks have been beaten up so much that people are nibbling," said Arnie Owen, managing director of capital markets at Roth Capital Partners. "It's such a mixed bag out there, because corporate culpability is such a huge issue. People are very, very nervous, but sometimes there are bargains."

The market's gains were not widespread, however, and many Wall Street experts were doubtful the market can sustain its momentum.

Intel (INTC), up $1.24 at $18.05, helped lead technology shares higher. But doubts over corporate credibility still weighed on the market. Bristol-Myers Squibb (BMY) lost $1.75 to $21.40 after confirming its sales practices are being investigated by U.S. regulators.

"There's no question that we are grossly oversold but the bear train is running at full speed," said Peter Cardillo, chief strategist at Global Partners Securities Inc. "This generally is a sign that we are at the final stages of the bear market. Despite good news, the waves of selling continue until we have total capitulation."

Collectively, investors have suffered a loss of market value of nearly $7 trillion. This is based on a decline of more than 41 percent since the market's all-time high on March 24, 2000 on the Wilshire Total Market index .

"There's no question the market is spooked about the SEC probe. It's feeding investor uncertainty in the era of WorldCom," said Richard Stover, an analyst at Arnhold & S. Bleichroeder.

Wall Street has charted a downward course as the latest leg of the vicious bear market that began in early 2000 played out on blow-ups like WorldCom Inc.'s $3.85 billion accounting scandal, fears of another attack on the United States and apprehension over upcoming quarterly earnings.

"We have in terms of valuation reached reasonable levels," said Rick Jandrain, chief investment officer at Banc One Investment Advisors, which oversees $148 billion. "But you continue to get a run on this bad news. Longer term, we believe the economy is on track here."

Economic data ahead of the open gave little solace to investors with one report showing a small uptick in producer level inflation and another showing the weekly number of Americans lining up for first time jobless benefits rising to 403,000, the highest level in six weeks.

"I have not seen a really bad earnings report .. Bristol is one of the bigger stories and the jobless claims number spooked people a little because it was above 400,000," said Brian Pears, head of equity trading at Victory Capital Management, speaking as the indexes cut losses and briefly headed into the positive. "But overall there's still a pall over the market so I can't get too excited about a rally yet."

Dow stock General Motors Corp. (GM) lost $1.22, or 2.6 percent, to $46.39. UBS Warburg cut its rating on the No. 1 carmaker from "buy" to "hold" because of risks stemming from its large U.S. pension liabilities.

Yahoo (YHOO) , the Internet media company posted a second-quarter profit and higher revenues, with the help of new fees on services. The company also raised its financial guidance for the remainder of the year.

Yahoo ticked up to $12.72 in after-hours trade after ending at $12.19. However, the shares fell in Thursday's session, down 35 cents at $11.84, or 2.8 percent, after Merrill Lynch downgraded Yahoo to a rare "reduce/sell" from "neutral" in the mid-term.

Wal-Mart (WMT), a Dow component, rose 94 cents to $54.70 after raising its second-quarter and full-year earnings guidance. The discount retailer cited better-than-expected sales driven by demand for seasonal goods like air conditioners and summer clothes.

More good news came from Eastman Kodak (EK) , the world's top maker of photographic film, which said earnings would be higher than estimated, though still below a year ago, as its wrenching restructuring efforts pay off sooner than expected.

Shares of Kodak, also component of the blue-chip Dow index, rose $1.71 to $28.35, or 6.4 percent.

Technical analysts say more damage lurks for the market based on ominous signs left by the recent price action. Both the tech-laden Nasdaq and the S&P 500 broke key support, or levels where buyers have emerged in the past. A breach of support usually sends an index down to the next support level, argue technicians.

Money managers and analysts also pointed to the fact that the battered market, after weeks of selling put indexes at multiyear lows, was the antithesis of its former high-flying self before the equity bubble burst in early 2000.

"The markets have become irrational now, just as they were somewhat irrational in 1999, 2000," said Hugh Johnson, chief investment officer at First Albany Corp.

"Markets are sometimes driven by sheer emotion. Just as it was driven by greed and euphoria in 1999 it is is now being driven by fear and distress, and that gets stirred up more and more every day."

Declining issues outnumbered advancers nearly 5 to 1 on the New York Stock Exchange. Volume came to 213.50 million shares, ahead of 181.32 million at the same point Wednesday.

Overseas, markets were sharply lower Thursday with Japan's Nikkei stock average finishing down 2.5 percent. In Europe, France's CAC-40 dropped 4.0 percent, Britain's FTSE 100 slid 4.3 percent, and Germany's DAX index fell 1.7 percent.

Reuters and the Associated Press contributed to this report.