Tokyo stocks open lower

Miracle on Wall St.: The Dow escapes a new closing low

A day like this on Wall Street should drive the conspiracy theorists wild.

For nearly the entire session the Dow Jones industrial average threatened to drop below its Nov. 20 close of 7,552.29, which had marked the worst of the 2008 sell-off.

Each time the Dow got within range of that number today, it bounced up. Then, in the last two minutes of trading, the index sank as low as 7,551.33, before a few final trades managed to lift it a hairbreadth above the Nov. 20 close to finish at 7,552.60.

So on the same day that President Obama signs the $787-billion economic-stimulus bill, a nearby headine doesn’t read: "Stocks plunge to new lows."

"It’s kind of fishy," acknowledges Ryan Detrick, a market technician at Schaeffer’s Investment Research in Cincinnati.

It still was a day of major damage: The Dow lost 297.81 points, or 3.8%, and most broader indexes suffered heavier losses as the gloom over the financial system and the global economy thickened anew.

But the White House now gets at least one more day to convince investors that the stimulus plan, and the housing-rescue program that Obama is set to announce on Wednesday, offer reasons to be hopeful about the economy.

Breaking through the November lows would send a simple, dire message: The bear market isn’t over. Investors who had been hanging on, hoping they’d seen the worst, might bail, making a deeper decline self-fulfilling. That, in turn, could feed back into the economy, fueling a downard spiral.

The conspiracy-free view of the Dow’s bullet-dodging performance is that the action near the closing bell was just a coincidence of speculative trading games.

For example, some chart-watchers may have waded in, figuring that if the Dow bounced once at this level (the late-November-to-early-January mini-rally) it could do it again, said Ryan Larson, head trader at Voyageur Asset Management in Chicago.

Also, some bearish "short sellers" may have been buying at the end of the session to take profits after the market slid as they expected.

Even if the 30-stock Dow had closed at a new bear-market low, it would have been alone among major share indexes: Despite their losses today, most broader indexes still have some daylight between their current levels and their Nov. 20 nadirs.

The Nasdaq composite, which lost 4.2%, remains 11.7% above its Nov. 20 close. The Standard & Poor’s 500, off 4.6% in the session, is 4.9% above its November low (although it’s down 12.6% this year).

But the Dow is the market to most people â€"- and it certainly is to most headline writers.

-- Tom Petruno

Tokyo stocks open lower

TOKYOJapanese share prices opened lower on Wednesday, with the benchmark Nikkei-225 index falling 105.55 points, or 1.38 per cent, to 7,539.96 in the first minute of trading. -- AFP
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