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Dow ends turbulent day with gain of 172 points

A late rally caps a wild session, pushing the index up 2% to 8,691.

October 24, 2008|Martin Zimmerman | Zimmerman is a Times staff writer.

Investors endured another seesaw session Thursday on Wall Street before a rally in the last half-hour of trading pushed the Dow Jones industrial average to a 172-point gain for the day.

The Dow closed at 8,691.25, up 172.04 points, or 2%. The broader Standard & Poor's 500 index, which on Wednesday fell to a more than five-year low, rose 11.35 points, or 1.3%, to 908.13.

Investors continued to unload technology stocks, however. The tech-heavy Nasdaq composite index dropped 11.84 points, or 0.7%, to 1,603.91. And shares of small companies took a beating, with the S&P small-cap index falling 2.7%.

And the late rally wasn't very broad: Losers outnumbered winners 3 to 2 on the New York Stock Exchange.

Bargain hunters were lured by stock prices that had fallen precipitously in recent weeks, pushing major market indexes to lows not seen in more than five years. But worries about the outlook for corporate profits and the overall health of the global economy kept the rebound in check.

"Earnings outlooks are coming in very weak," said John Thornton, portfolio manager at Stephens Investment Management Group in Houston. "It's indicative of company managements seeing a slowdown in the economy as well as a total lack of visibility going forward. There is not a lot of good news to help stabilize the market."

Among the bad news Thursday was a report that home foreclosures surged 71% in the third quarter to a record, indicating that the collapse of the housing market that touched off the current credit crisis is far from over.

Also, the Labor Department reported that first-time claims for unemployment benefits last week rose more than expected to a seasonally adjusted 478,000. A level above 400,000 is considered a recession red flag.

The earnings news was mixed. Online retailer Amazon late Wednesday lowered its sales forecast for the year, and soft-drink distributor Coca-Cola Enterprises cut its 2008 profit projection. But chemical maker Dow and railroad company Union Pacific reported higher quarterly earnings.

Some energy shares gained as oil prices rose. Crude for December delivery climbed $1.09 to $67.84 a barrel.

Credit markets showed little improvement, with interbank lending rates, which had been inching steadily downward, mostly flat or slightly higher for the day.

Following the pattern of the last several weeks, stocks gyrated wildly for much of the session, swinging in and out of positive territory. The Dow was up more than 275 points in the first 90 minutes of trading, and at one point later was down by a similar amount.

"I think it's people selling into rallies and not being all that excited to buy into declines," Manny Weintraub, president of Integre Advisors in New York, told the Associated Press, referring to the market's difficulty maintaining its gains.

The Dow has closed with triple-digit gains or losses in 29 of the last 34 trading sessions.

Overseas markets were mostly lower before the start of trading on Wall Street. Stocks in Tokyo and Hong Kong were down 2.5% and 3.5%, respectively. Shares fell 1.1% in Frankfurt but rose 1.2% in London.

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martin.zimmerman@ latimes.com

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