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The Honolulu Advertiser

Updated at 12:38 p.m., Wednesday, February 28, 2007

Dow fluctuates before ending day up

By TIM PARADIS
Associated Press Business Writer

 

A pedestrian walks past the famed bronze bull in New York's financial district today. Stocks rose after Federal Reserve Chairman Ben Bernanke testified on Capitol Hill and allayed some of the fears about a slowdown in the U.S. and Chinese economies that fed yesterday's drop.

Mark Lennihan • Associated Press

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NEW YORK — Wall Street rebounded fitfully today from the previous session's 416-point plunge in the Dow industrials as investors took comfort from comments by Federal Reserve Chairman Ben Bernanke but still showed signs of unease about the economy.

Bernanke's remarks to Congress that he still expects moderate economic growth gave some investors confidence to look for bargains. A recovery in some overseas markets following a worldwide selloff yesterday also lent some support to U.S stocks, but the advance lacked some conviction — the major indexes fluctuated through the morning and into the afternoon, with the Dow rising as much as 137 points before pulling back and then advancing again.

The Fed chairman allayed some of the fears about a slowdown in the U.S. and Chinese economies that fed Tuesday's drop; remarks earlier in the week from former Fed Chairman Alan Greenspan warning that a U.S. recession could take hold later this year contributed to Tuesday's declines.

Investors parsed a series of economic reports out today, hoping to glean a sense of where stocks were headed. Bernanke's comments and a gross domestic product reading that mostly met expectations helped bring out some buyers. Nevertheless, investors remained cautious and didn't rush headlong into stocks and discount the possibility of a further shakeout.

"It's typical that you get a bounceback the next day," said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co. "Now we're essentially flat on the year. Can we go up from here or down? That sorting-out process will continue now."

A recovery in China's Shanghai Composite Index, which had fallen nearly 9 percent yesterday, also helped boost U.S. stocks, although other Asian markets and European exchanges saw declines of more than 1 percent.

The Dow Jones industrials rose 52.39, or 0.43 percent, to 12,268.63.

Broader stock indicators also managed gains. The Standard & Poor's 500 index climbed 7.78, or 0.56 percent, to 1,406.82, and the Nasdaq composite index rose 8.29, or 0.34 percent, to 2,416.15.

Tuesday's decline, which was the largest point drop in the Dow industrials in more than five years, made February an unwelcome month for the 30-stock index. The Dow had its worst monthly percentage drop since April 2005 and the worst monthly point decline since December of 2002.

For the S&P, February was the worst percentage and point decline since May last year. And for Nasdaq, the month marked the worst percentage and point decline since July.

Bonds fell today as stocks tried to recoup some losses. The yield on the benchmark 10-year Treasury note rose to 4.57 percent from its low for the year of 4.47 percent late Tuesday.

The dollar was mixed against other major currencies, while gold prices fell.