Stocks Fall, Ending Their 4-Day Rally

Stock markets broke their four-day rally yesterday, dipping into negative territory after a volatile day of trading.

Both the blue-chip Dow Jones industrial average and the broader Standard & Poor's 500-stock index started the day strong, eventually soaring more than 2 percent amid renewed confidence in the financial sector. But those gains evaporated about half an hour before closing as investors hedged their bets, analysts said, sending the two major indexes close to flat.

The Dow closed down 0.1 percent, or 7 points, at 7216.97. The S&P fell 0.4 percent, or 2.7 points, to 753.89. The tech-heavy Nasdaq swung wildly for most of the day, dragged down by Microsoft and Intel. It dropped 1.9 percent, or 27.48 points, to 1404.02.

"This is the sort of thing that has been standing in our way for the last several months," said Carl Beck, partner with Harris Financial Group in Richmond. "Every time you get a good rally going, you start running out of steam."

The declines come after last week's rally boosted the markets out of 12-year lows, providing the best performance since November. Investors had hoped the momentum would continue, especially after Federal Reserve Chairman Ben S. Bernanke expressed confidence during a "60 Minutes" interview on Sunday that the country's largest banks would not fail.

Bank stocks were among the biggest gainers. Citigroup, which, along with Bank of America, said last week that it had turned a profit for the first two months of the year, shot up 31 percent, or 55 cents, to $2.33. Insurance giant AIG skyrocketed 66 percent, or 33 cents, to 83 cents despite being blasted by the Obama administration for paying millions of dollars in bonuses.

Still, much of the day's gains began to moderate by afternoon, with some sectors posting slight declines. Technology stocks were the biggest losers, down 1.4 percent.

"Stocks have a long way to go whenever we are truly recovering," said Andrew Brooks, head of stock trading at T. Rowe Price.

Investors also chewed on some dour economic news yesterday. Industrial production fell 1.4 percent in February, according to the Federal Reserve, the fourth consecutive month of decline. Manufacturing dropped 0.7 percent. Capacity utilization plunged to 70.9 percent, a low not seen since 1982.

London's FTSE 100 index was up for the third day, jumping 3 percent, or 110.3 points, to 3863.99, led by Barclays. In Asia, financial stocks and automakers helped push Japan's Nikkei up 1.8 percent, or 134.87 points, to 7704.15.