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NEW YORK - US stocks rallied late in the session on Wednesday, led by rising shares of financial companies on speculation about capital infusions for bond insurers.
The gains, which sent the Dow up more than 2 per cent, put Wall Street on course to snap a
5-day string of losses.
The Dow Jones industrial average was up 243.14 points, or 2.03 per cent, at 12,214.33. The Standard & Poor's 500 Index was up 24.23 points, or 1.85 per cent, at 1,334.73. The Nasdaq Composite Index was up 20.13 points, or 0.88 per cent, at 2,312.40.
Earlier, stocks slid for a sixth session on Wednesday, led by the Nasdaq's drop of more than 3 per cent as profit forecasts from Apple Inc and Motorola added to recession fears.
For the second day, the Nasdaq crossed the threshold that signals a bear market. The Dow and S&P 500 were each down more than 2 per cent.
After Tuesday's closing bell, Apple forecast a quarterly profit below analysts' expectations and reported disappointing holiday-season iPod shipments. Apple's stock sank 18 per cent to $127.55 on the Nasdaq.
Mobile phone maker Motorola Inc forecast a loss for the current quarter and said it expects a challenging year. Motorola shares lost 19 per cent to $9.95 and ranked among the biggest percentage losers on the New York Stock Exchange.
"You're having a massive shift taking place," said Steve Goldman, market strategist at Weeden & Co., in Greenwich, Connecticut. "All of those (sectors) that have led declines have shifted in the last couple of days," and the reverse is true of stocks that have led gains, including tech shares.
"We're moving closer to a bottom, but we're not there yet."
The news from Apple, Motorola and others underscored concerns about the health of the US consumer.
Commodity and energy companies' shares also fell, including ConocoPhillips, which was down 4.4 per cent at $68.06 after it gave a weak production outlook.
On the plus side were financial companies, which gained for a second day after the Federal Reserve slashed interest rates by 75 basis points in an emergency move to forestall a recession. The S&P financials index rose 1.3 per cent.
The Nasdaq crossed the threshold of a bear market, which is defined as falling 20 per cent or more from a recent closing high. But to confirm the onset of a bear cycle, a prolonged period in which investment prices fall, the index needs to end at least 20 per cent off its closing peak.
Both the S&P 500 and Dow were also near bear market levels. (Editing by Jan Paschal)
- REUTERS