NEW YORK, April 18 -- The stage seemed set Monday morning for another bloodbath on Wall Street.
Japan's Nikkei 225 index had swooned nearly 4 percent overnight, in part because of last week's dramatic sell-off in the U.S. stock market. European markets followed Japan's lead, finishing down as much as 2.6 percent on fears of a United States-led slowdown in the global economy.
When the opening bell rang in New York, sellers once again took over, threatening to extend last week's decline, which saw the Dow Jones industrial average shed nearly 400 points, or 3.6 percent.
By 11:30 a.m., the Dow was just 21 points above 10,000 and appeared poised to finally relinquish the last of its 2004 gains. But then a handful of bargain hunters emerged to pick through the wreckage of last week and snap up a few carefully chosen shares.
"There was a great deal of trepidation coming into today," said Arthur Hogan, chief market strategist at Jefferies & Co. "We were down 400 points last week, and then people looked at Europe and Asia and that just added to the fear."
But Hogan and others said that at some point during the morning, investors focused on a handful of good earnings reports, a pair of big merger deals and some reassuring comments from a Federal Reserve governor and decided that maybe things had gotten out of hand.
"People decided that enough damage had been done last week and that the punishment probably did not fit the crime," Hogan said.
What ensued could hardly be called a rally -- a weak sales report from Dow component 3M and trepidation over closely watched inflation reports due out this week made that impossible.
But enough investors dipped back into the market to help drive the Standard & Poor's 500-stock index to a slight gain of 3.36 points, or 0.3 percent, and limit the Dow to a narrow loss of 16.26 points, or 0.2 percent. The S&P closed at 1145.98, while the Dow finished at 10,071.25. The Nasdaq composite index gained 4.77 points, or 0.2 percent, to close at 1912.92.
Some traders and money managers took solace in the fact that investors did not appear to focus too heavily on 3M. The company reported that while earnings grew 12 percent in the first quarter over the same period last year, sales volume grew only 1.8 percent, well below the company's prediction. The report seemed to confirm last week's fears that the U.S. economy has hit more than just a soft patch.
