U.S. stocks slide but close well above day's lows; Dow falls 137
U.S. stocks climbed back from steep early losses Tuesday to finish with moderate declines, helped by an upbeat economic assessment from the Federal Reserve.
Analysts said Wall Street also benefited from the sense that U.S. markets were relatively safe compared with much of the rest of the world, with Japan devastated by Friday’s massive earthquake and tsunami and the Middle East facing continuing revolt.
The Dow Jones industrial average ended down 137.74 points, or 1.2%, to 11,855.42, paring what had been a loss of nearly 300 points at the opening bell.
Broader U.S. indexes also lost 1% or so. The Nasdaq composite fell 1.2% to 2,667.33 after being down as much as 3% early on.
Stocks’ collapse in Japan dragged down markets across Asia and in Europe. Hong Kong shares slid 2.9%, the German market tumbled 3.2% and British stocks lost 1.4%.
But after diving at the opening, U.S. stocks climbed steadily the rest of the day. Federal Reserve policymakers, holding a regularly scheduled meeting, helped buoy sentiment by saying in their post-meeting statement that the domestic economy appeared to be on “firmer footing, and overall conditions in the labor market appear to be improving gradually” since late January.
However, the Fed pledged to continue with its program of buying Treasury bonds to help suppress interest rates and underpin growth. That program will end as planned in late June, the Fed said.
A plunge in commodity prices on Tuesday also may have helped bolster demand for stocks. Rising raw materials costs had been stoking inflation pressures worldwide in recent months, but traders now are pulling back from those bets, uncertain about demand as Japan’s woes raise fresh concerns about global growth.
"This gives us some breathing room" on commodity prices, said Jim Swanson, chief investment strategist at MFS Investment Management in Boston.
Crude oil futures in New York fell $4.01 to $97.18 a barrel, the lowest closing price since Feb. 28, despite Bahrain's declaration of a state of emergency as the government seeks to put down a popular uprising.
With Tuesday’s decline, the Dow index is down 4.3% from its multiyear high reached on Feb. 18. By contrast, the Japanese market has plunged 21% in the same period and the average European blue-chip stock is down 8.6%.
-- Tom Petruno
Photo: A trader on the New York Stock Exchange floor on Tuesday. Credit: Associated Press