Just as it seemed that Wall Street would be heading into a fourth day of steep declines on inflation fears and higher interest rates across the globe, investors rallied Thursday to end the day nearly flat.
Early trading saw stocks plunge, with the Dow Jones industrial average losing 173 points by noontime. By late afternoon, however, bargain hunters picked up cheaply priced stocks which helped turn the market around.
The Dow rose nearly eight points to close at 10,938.82 points. The index has posted a cummulative loss of 330 points since last Friday.
Central banks around the world, including the European Central Bank and the Bank of Korea lifted key lending rates today to counter inflation, following commentary by U.S. monetary policy officials this week who have given strong indications that they will be also be vigilant, paying close attention to economic indicators.
The markets are very oversold on a short term basis. What we may have seen today is a sort of catharsis or washout, said Michael Sheldon, chief market strategist for Spencer Clarke. Investors thinking about selling threw in the towel.
Sheldon also noted that with that the broader S&P 500 index closing up marginally was encouraging, posting an overall upward trend since September of 2004, with the reference point being 1,235, the low today, a fact that could assuage investors worried about inflation.
Meanwhile, the Nasdaq exchange dropped 6.48 points or 0.3 percent to close at 2,145,32.