NEW YORK (AP) — Wall Street seesawed through an erratic session yesterday, trying to stabilize but ultimately finishing near its lows of the day amid worries about mortgage defaults, a strengthening yen and tumbling stock markets abroad.
The major indexes fluctuated throughout the session, with the Dow Jones industrials bobbing between positive and negative territory as investors tried to size up where the market was headed after last week’s big decline. The Dow Jones Industrial Average finished 63 points lower, having fallen in eight of the last nine sessions.
The market remained jittery about losses over soured subprime loans, or loans to customers with poor credit ratings. HSBC Holdings PLC, Europe’s largest bank, said its 2006 earnings rose 5 percent but that it suffered $10.6 billion in losses on bad loans from its U.S. subprime mortgage operations.
Also pushing stocks down, a rising yen added to concerns about an erosion of the yen carry trade, which is the process of borrowing the low-yielding yen to acquire assets in other currencies with greater yields. A slowdown could hurt liquidity worldwide. By late in the day, the U.S. dollar was at 116 yen, trading near three-month lows after falling from above 120 yen less than a week ago.
Though the markets were uneasy yesterday, they were hardly out of control as the Dow traded within a 150-point range and stayed above the 12,000 mark, which it breached for the first time in October last year.
“Stability is a good sign,” said Todd Salamone, senior vice president of research at Schaeffer’s Investment Research. He noted that stocks could see volatility for months, but that over the long term, the market looks poised to climb. “Expectations for economic data, earnings data — both have been ratcheted lower. Markets tend to do better when expectations are low, because they have better odds for positive surprises.”
The Dow fell 63.69, or 0.53 percent, to 12,050.41, having swung 75 points lower and 75 higher than Friday’s close in earlier trading. The blue chips have now fallen 581 points, or 4.6 percent, from their closing price last Monday, the day before the market’s plunge.
Broader stock indicators also fell. The Standard & Poor’s 500 Index slipped 13.05, or 0.94 percent, at 1,374.12, and the Nasdaq Composite Index — which is dominated by riskier technology and smallcap stocks — dropped 27.32, or 1.15 percent, to 2,340.68. The Russell 2000 Index of smaller companies dropped 15.38, or 1.98 percent, at 760.06.
Bond prices were flat, keeping the yield on the benchmark 10-year Treasury note at 4.51 percent, as the stock market’s tolerable performance earlier in the day kept investors from rushing to Treasurys.
The dollar was higher against other major currencies except for the yen. Gold, though traditionally a safe-haven investment, continued its slide.
Oil prices dropped sharply on the possibility that stocks’ decline could dampen demand, but they lifted from earlier lows below $60 a barrel to finish down $1.57 at $60.07 on the New York Mercantile Exchange.
The market saw the bulk of its drop right before the close, in a similar pattern to Friday, when the Dow flirted with gains only to drop 120 points late in the day. Stock investors appeared to have been somewhat consoled by comments attributed to U.S. Treasury Secretary Henry M. Paulson Jr. by Japan’s finance minister, Koji Omi. Neither Mr. Omi nor Mr. Paulson, who began a three-nation Asian tour in Tokyo yesterday, were concerned by the swings in regional stock markets, Mr. Omi told reporters.
Still, Asian and European stocks closed lower, keeping U.S. investors on edge. The Nikkei fell for the fifth straight session to close down 3.3 percent, Hong Kong’s Hang Seng index fell 4 percent and the Shanghai Composite Index, which has been volatile in recent weeks, fell 1.6 percent.
In Europe, Britain’s FTSE 100 dropped 0.94 percent, Germany’s DAX fell 1.04 percent, and France’s CAC-40 declined 0.73 percent.
The Institute for Supply Management’s report on the services sector failed to inject much confidence in the market.
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