Wild Ride On Wall Street

July 15, 2002

"You're constantly fighting your gut instinct, which is to head for the hills."
Eric Barden


(CBS) What a rebound Monday for the stock market. After losing more than 400 points during the afternoon, the Dow came back - finishing down by fewer than 50 points at the end of the session.

The Nasdaq composite index, after being solidly lower for much of the day, finished in positive territory, gaining about eight points. The S&P 500 finished down by nearly four points.

The late-afternoon comeback was attributed more to the bargain prices that were available, rather than any change in investor sentiment, which remains downbeat because of corporate accounting scandals and uncertainty about the strength of the economy.

Earlier in the day, near-panic conditions prevailed:

"For lack of a better description, you have as much full-fledged panic as you are going to get," said Tony Cecin, director of institutional trading at US Bancorp Piper Jaffray in Minneapolis. "The negative mentality is as pervasive as I have ever seen it." He added that he had gone through the bear market of 1973-74.

"Buyers are on the sidelines until we see some positive earnings announcements and the corporate scandal cloud blows over," said Eric Barden, manager of the Texas Capital Value Funds. "There's no safe harbor here. You're constantly fighting your gut instinct, which is to head for the hills."

Earlier in the session, the Dow was approached its Sept. 21 low of 8,235.81. Prior to the terror attacks, the Dow hadn't closed lower since Oct. 14, 1998, when it finished at 7,968.80.

Even positive economic news failed to cheer Wall Street when the Commerce Department reported businesses raised their inventories by 0.2 percent. The increase, the first since January 2001 and better than the 0.1 percent analysts had expected, indicates that companies are confident enough about the economy to increase their stockpiles.

Despite mounting evidence of an economic recovery, investors have been unloading stocks for eight weeks due to unceasing worries about the integrity of corporate accounting and earnings. The major indexes have not finished a week higher since mid-May.

http://www.cbsnews.com/stories/2002/07/05/national/main514340.shtml