Intel hammers techs The Nasdaq composite remains under pressure, but the Dow and S&P 500 stabilize after a tough morning. EMAIL | PRINT | DIGG | RSS Subscribe to Markets
feed://rss.cnn.com/rss/money_markets.rss Paste this link into your favorite RSS desktop reader See all CNNMoney.com RSS FEEDS (close) By Alexandra Twin, CNNMoney.com senior writer January 16 2008: 12:32 PM EST
NEW YORK (CNNMoney.com) -- Blue chips stabilized Wednesday afternoon, as investors scooped up some of the stocks battered in the recent selloff, but the tech sector remained deep in the red on disappointment about Intel's earnings and outlook.
The Dow Jones industrial average (INDU) added a few points 3 hours into the session, while the broader S&P 500 (INX) index lost 0.2 percent. The Nasdaq composite lost 0.9 percent.
Stocks have gotten battered so far this year on worries that the credit crunch is sending the economy into a recession, if it isn't there already. Year-to-date, the Dow and S&P 500 had fallen around 6 percent as of Tuesday's close, while the Nasdaq had fallen 8.8 percent.
On Tuesday, Citigroup's big quarterly loss and weak Dec. retail sales amplified recession concerns, sending the Dow to a 9-month low and the S&P 500 and the Nasdaq at 10-month lows.
The broader worries remained in place Wednesday, but after such a big selloff in such a short period of time, investors were willing to scoop up select stocks.
Investors were also perhaps relieved because the morning's inflation report, the Consumer Price Index (CPI), showed pricing pressure is contained.
"It gives the Fed even more freedom to move to keep us from falling into a recession, if we are not in one yet," said J. Stephen Lauck, CEO and portfolio manager at Ashfield Capital Partners.
Investors have been clamoring for the Fed to cut interest rates more aggressively at the next policy meeting that ends Jan. 30. Some on Wall Street are also calling for the central bank to step in ahead of the meeting to help stabilize markets.
A Citigroup report said the stock market is behaving as if a recession is unavoidable. If the threat of recession does become a reality, stocks probably have a lot further to fall, the report said.
Separately, the Merrill Lynch Global Fund Managers' survey for January shows that nearly 20 percent of respondents think a global recession is likely or very likely over the next 12 months.
Inflation pressure eases JP Morgan (JPM, Fortune 500) reported weaker earnings that missed estimates amid a $1.3 billion writedown for bad mortgage debts. However, the financial leader also reported higher revenue that topped estimates.
JP Morgan shares gained more than 6 percent and helped lead a bounce back in financials, one of the sectors hit hardest in the recent decline.
Fellow bank Wells Fargo (WFC, Fortune 500) reported weaker quarterly earnings due to a big subprime hit as well. However, the bank's earnings topped forecasts by a penny, sending shares higher.
The Amex Securities Broker/Dealer (XBD) index was down almost 10 percent year-to-date as of Tuesday's close. It bounced 2 percent Wednesday, with stocks such as Lehman Brothers (LEH, Fortune 500), Goldman Sachs (GS, Fortune 500) and Merrill Lynch (MER, Fortune 500) all gaining.
Home Depot (HD, Fortune 500) and Wal-Mart Stores (WMT, Fortune 500) led the list of retailers bouncing back. Biotech, health care and homebuilder stocks recovered a bit as well.
The broad tech sector stocks cut losses, but remained in the red.
Intel (INTC, Fortune 500) reported quarterly results and an outlook late Tuesday that disappointed investors. Intel shares slipped almost 12 percent Wednesday.
Microsoft (MSFT, Fortune 500), Cisco Systems (CSCO, Fortune 500) and Yahoo! (YHOO, Fortune 500) were among the big technology shares dragging on the Nasdaq
One tech standout was BEA Systems (BEAS), which jumped 19 percent in active Nasdaq trade on reports that it has agreed to be bought by Oracle in an $8.5 billion all-cash deal. Oracle (ORCL, Fortune 500) stock gained 1 percent.
Wall Street to Fed: Cut rates now In economic news, the December Consumer Price Index (CPI) rose 0.3 percent versus a year ago, while CPI at the core level - which strips out volatile food and energy - rose 0.2 percent. Economists surveyed by Briefing.com expected both CPI and core CPI to rise 0.2 percent.
The Fed's beige book read on the economy is due this afternoon. Additionally, the Joint Economic Committee is holding a hearing in Washington on what action the Federal Government should take to help avoid a recession.
Treasury prices slumped, raising the yield on the 10-year note to 3.69 percent from 3.68 percent late Tuesday. Treasury prices and yields move in opposite directions.
U.S. light crude oil for February delivery fell $1.85 to $90.05 a barrel on the New York Mercantile Exchange after the government's weekly inventory report showed a surprise jump in crude stocks.
COMEX gold for February delivery fell $20.90 to $881.70 an ounce.
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