NEW YORK -- The U.S. stock market made a last-hour rally to rebound from serious losses that earlier in the day had the Dow to fall more than 200 points and caused trading curbs to be imposed.
Early in the day investors fled technology names on fears that rising interest rates would rock knockout revenue growth. The bail-out sent all major U.S. equity indexes tumbling and pushed the Nasdaq composite to a new intraday low for the year. At its worst, the composite hit a level not seen since mid-November.
"There is nothing out there guiding investors, nothing to latch onto," one Nasdaq market maker said. "And with no guidance, people are left to continue thinking about other stuff, like the Fed."
By early afternoon, the Nasdaq Composite Index had dropped 187 points, or 5.54 percent, to 3,202 -- up from the session low of 3,172. At the day's bottom, the Nasdaq was below the year's previous intraday low of 3,227 hit on April 17 and the closing low of 3,321 hit on April 14.
But the tech-laden Nasdaq rallied to close at 3,364, down just 26 points.
Tech weakness hurt the blue-chip Dow Jones industrial average, driving it down 225 points, or 2.12 percent, to 10,401 in midday trading.
But the Dow also stemmed those losses to close down 83 points at 10,542.
The Dow's biggest loser was General Motors (GM), which was off 9-1/2 at 77-7/16. The automaker said the offer to exchange shares of its GM Hughes Electronics affiliate for GM common stock was "significantly oversubscribed."
GM Hughes (GMH) stock, which unlike its parent is not a Dow component, was up 6-1/16 at 95-15/16.
Broader measures of the market were also beaten back, with the Standard & Poor's 500 index down 6.3 points.
With little economic news to guide Wall Street, analysts said the market could continue to fret about what the prospect of more interest-rate hikes will mean for stocks, especially the technology issues that until recently were market leaders.
"I think that there has been a complete shift in psychology," said James Volk, co-director of institutional trading at D.A. Davidson & Co. in Portland, Oregon.
"People are afraid that not only are higher interest rates going to slow down the economy, but also the sales of all the Nokias, Ciscos, and Qualcomms," Volk added. "They are trading on sales, not earnings."
The Federal Reserve warned of more rate hikes to come last Tuesday when it boosted rates by an aggressive 50 basis points. Its rate-setting committee will next meet in late June.
Wall Street is likely to listen for any clues from Federal Reserve Bank of Chicago President Michael Moskow, who is set to discuss "Monetary Policy and the Economy: A Policymaker's Perspective," in Kalamazoo, Michigan, at 4:00 p.m. EDT.
Bond prices rose on stocks' weakness. The 10-year U.S. Treasury note was up 17/32, driving the yield down to 6.42 percent from Friday's close of 6.50 percent. The 30-year bond gained 24/32, with the yield falling to 6.16 percent from Friday's close of 6.21 percent.
Highlighting the downward drive in technology, Microsoft (MSFT) fell to 62-3/4 -- hitting a level last seen in December 1998, before closing down 1-9/16 at 63-1/2. WorldCom (WCOM) fell 1-3/8 to 36-3/8, a mark last hit in November 1998, but rallied to close up 1/8 at 37 7/8.
Oil stocks gained ground as crude prices slipped. The American Stock Exchange's oil index rose 0.35 percent to 310. By early afternoon, the crude oil contract for June, which expires at 3:15 p.m. EDT, was down $1.32 at $28.57 per barrel. The July contract was down $1.10 at $28.75.
