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Sure, It's Miserable, but Is the End Near?

Stocks: Amid another market plunge, some traders think they see signs of a bottom. Others doubt it.


NEW YORK — On a day when the Nasdaq composite index fell to a 30-month low and the broad market dived as well, some traders were willing to take another crack at calling a bottom.

It's been a popular refrain during an almost 13-month decline that has erased $5.3 trillion in market value, equal to half the U.S. gross domestic product.

"We're seeing seven-figure sell orders in quality stocks--and that's people throwing things out the window," said Tom Heekin, head trader at Thomas Weisel Partners. "I think that's a positive sign in that we may be putting in a short-term bottom."

Renee Carret, who helps manage $1.5 billion for Carret & Co. in New York, disagreed with Heekin, although she said has been buying shares of AOL Time Warner, which sank $3.27 to $33.90 Tuesday.

"There's no visible bottom in sight," she said.

The Nasdaq composite index slumped 109.97 points, or 6.2%, to 1,673.00 Tuesday, while the Dow Jones industrials slid 292.22 points, or 3%, to 9,485.71, holding above the recent two-year low set in late March.

Amid another rash of corporate earnings warnings, investors fled in droves. Nasdaq trading volume surged to 2.5 billion shares as losers swamped winners 15 to 4 on that market.

"It's difficult to say whether this is the climax selling that everyone has been looking for, but it certainly feels pretty miserable out there," said David Brady, who manages the $1.1-billion Liberty-SteinRoe Young Investors Fund.

One sign of a climax may be that money managers who wouldn't touch tech stocks for the last three years are now buying them.

Dean Investment Associates in Dayton, Ohio, may add to its stake in Intel, even though the firm's president thinks the chip maker, which fell 80 cents Tuesday to $25 and is down by two-thirds in seven months, has room to drop further.

"If it gets cheaper, we'll add more," said John Riazzi. "There's probably an additional 20% downside in Intel right now, but we see this as a $50 stock" eventually.

Dean is buying technology shares as part of a bet that economic growth will return by year-end and that companies like Microsoft, down $2.44 to $53.38 Tuesday, have declined so much that there's a chance to make money.

"The watershed event was Microsoft below $50 for us," said Riazzi. "I've been in this business for 15 years and I said to myself, 'I can't believe we're talking about having a shot at Microsoft."'

Another sign of a bottom may be that investors are selling stocks they had been reluctant to part with in the first quarter--such as some smaller issues. The Standard & Poor's small-cap index has slumped 5.7% just this week. It had lost 6.7% in the entire first quarter, holding up far better than most big-stock indexes.

Lehman Bros. Chief Executive Richard Fuld started out as a trader in 1969. Tuesday morning, after the securities firm's hourlong annual meeting, he stood--hands on hips and back against the stage--looking out over an auditorium filled with red cloth seats and dark wood paneling.

"I don't see a 'V'," Fuld, 54, told a small group of reporters and senior executives, referring to the pattern of stock prices on a graph. "I don't see a 'U' either. I just see a long 'L' " in terms of how the market might trend after its decline has ended.

In other trading Tuesday:

* U.S. Treasury note yields fell, with two-year yields dropping to their lowest level in 29 months, as the latest plunge in stocks sent investors to the relative safety of government debt.

Demand for notes pushed the yield gap between two- and 30-year bonds to its widest in 6 1/2 years. The yield on the two-year T-note yield fell to 4.15% from 4.23% Monday. The 30-year T-bond yield was flat at 5.47%, however.

* The dollar had its biggest drop in three months against the euro and sank against the yen as stocks slid, eroding demand for the currency.

The dollar dropped to a five-day low of 89.78 cents per euro, down 2.1% from Monday. That was the U.S. currency's steepest one-day decline against the European common currency since Jan. 4.

The dollar fell 1% to 125.54 yen, its biggest drop against the Japanese currency in five weeks.

Market Roundup: C7, C8


Stocks fell on ongoing fears on the tech sector, compounded by the China standoff. A1

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