Stocks fall as three-day rally reverses
Warren Buffett, chairman and chief executive of Berkshire Hathaway. (Oct. 5, 2010) Credit: AP
A three-day stock rally ended much like it began, with a steep and sudden turn.
Stocks started higher early Thursday but turned lower within 20 minutes. Indexes in the United States and Europe sank after Germany's main stock index, the DAX, suddenly dipped 4 percent.
The Dow Jones industrial average fell 170.89 points, or 1.51 percent, to close at 11,149.82. It had been up 85 points shortly after the opening bell.
Bank of America Corp. jumped 9 percent on news that Warren Buffett will invest $5 billion in the troubled bank. BofA had lost half its value this year as investors grew worried about its need to raise capital and its growing liabilities related to subprime mortgages.
This week's trading has been marked by a series of sudden reversals. Robert Stein, a money manager responsible for $1.2 billion at Astor Asset Management, said questions about the economy have made investors uncertain and the stock market more volatile. Gains made one day can disappear the next, or even in the same day.
"We're not seeing anything that's convincingly bearish enough to call another recession, but nothing optimistic enough to suggest that a recovery is going to regenerate," Stein said.
The Standard & Poor's 500 index fell 18.33 points, or 1.56 percent, to 1,159.27. The Nasdaq fell 48.06 points, or 1.95 percent, to 2,419.63.
