- The Washington Times - Wednesday, February 28, 2007

NEW YORK (AP) — Wall Street rebounded fitfully yesterday from the previous session’s 416-point plunge in the Dow industrials as investors took comfort from comments by Federal Reserve Chairman Ben S. Bernanke to Congress but still showed signs of unease about the economy.

A recovery in some overseas markets following a worldwide sell-off Tuesday also lent some support to U.S. stocks, but the advance lacked some conviction — the major indexes fluctuated throughout the day, with the Dow Jones Industrial Average rising as much as 137 points before pulling back and advancing again several times.

The Dow ended the day up 52.39, or 0.43 percent, at 12,268.63.

The Standard & Poor’s 500 Index climbed 7.78, or 0.56 percent, to 1,406.82, and the Nasdaq Composite Index rose 8.29, or 0.34 percent, to 2,416.15. The Russell 2000 Index of smaller companies rose 0.64, or 0.08 percent, to 793.30.

Investors parsed a series of economic reports yesterday, hoping to glean a sense of where stocks were headed.

“It’s typical that you get a bounce back the next day,” said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co. “Now we’re essentially flat on the year. Can we go up from here or down? That sorting-out process will continue now.”

The Dow had its worst monthly percentage drop since April 2005 in February and the worst monthly point decline since December of 2002.

For the S&P;, February was the worst percentage and point decline since May last year. And for Nasdaq, the month marked the worst percentage and point decline since July.

Bonds fell yesterday as stocks tried to recoup some losses. The yield on the benchmark 10-year Treasury note rose to 4.57 percent from its low for the year of 4.47 percent late Tuesday.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude settled up 33 cents to $61.79 per barrel on the New York Mercantile Exchange as investors brushed off concerns about falling demand from China.

The market took some solace from the Commerce Department report that the U.S. economy grew at an annual rate of 2.2 percent in the fourth quarter. The gross domestic product reading was slightly below expectations, but wasn’t as weak as some investors had feared. The figure was more than a percentage point below the initial estimate of 3.5 percent made a month ago.

The National Association of Purchasing Management-Chicago index of business conditions in the Midwest showed a weaker-than-expected reading. The February figure fell to 47.9 from 48.8 in January.

Also, a Commerce Department report found new-home sales fell by 16.6 percent in January from the previous month, the largest drop in 13 years. Shares of home builders fell.

While some observers had warned that stocks had grown overvalued after the strong gains logged in 2006, Tuesday’s pullback nonetheless came as a surprise on Wall Street, which had gone 45 months without a decline of more than 2 percent in a single session.

In the bumpy trading that occurred yesterday, particularly as fresh economic data emerged, investors appeared to be still calculating the ramifications of Tuesday’s losses, which erased $632 billion in shareholder equity, according to Standard & Poor’s.

Amid another heavy volume day yesterday, the New York Stock Exchange instructed specialists, who match buyers and sellers, to keep their stock posts open longer than normal to catch any trades that might still be filtering through the system. The enormous volume of orders Tuesday led to a bottleneck in the Big Board’s trading system.

Merck & Co. regained some ground after the drug maker issued a first-quarter profit forecast that surpassed estimates of Wall Street analysts and raised its profit target for the year. The company rose 97 cents, or 2.3 percent, to $44.15.

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