Dow dips below 10,000, then bounces back

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NEW YORK --- The Dow Jones industrials plunged below 10,000 to their lowest level of the year Tuesday before a late-day rebound that erased most of the losses, if not lingering worries about Europe's debt crisis.

Trader Albert Young watches the numbers on the floor of the New York Stock Exchange on Tuesday. The Dow has closed below 10,000 only once this year, in early February. 
  Associated Press
Associated Press
Trader Albert Young watches the numbers on the floor of the New York Stock Exchange on Tuesday. The Dow has closed below 10,000 only once this year, in early February.

The Dow dropped more than 250 points after the opening bell and stayed under 10,000 most of the day, then charged back to finish down only 22 when signals from Washington suggested banks would not be forced to sell their lucrative derivatives units as part of financial reform.

More turbulent days are likely. The market worries that even austerity measures by European governments will not be enough to fix the problem and fight off a prolonged economic slump in Europe, or even another global recession.

"It seems like the Europeans are playing 'Tag, you're it' -- first it was Greece, and now it's maybe Spain or Portugal," said Jonathan Corpina, a New York Stock Exchange floor trader and president of Meridian Equity Partners. "We know someone else is next. The problem is that it seems like every plan in place isn't going to satisfy the needs."

Other European countries also are imposing budget cuts, trying to control their debt. Investors are concerned that these steps will stifle economic growth, and that the growth of other countries, including the U.S., will be stunted.

Investors also were reminded that political issues, such as tension between North and South Korea, can threaten economic growth.

In just the first half-hour of trading, the Dow sank to 9,774.48, its lowest reading this year, and for much of the day threatened to set a new closing low for the year.

But bank stocks surged, and the rest of the market followed, after Rep. Barney Frank, the head of the House Financial Services Committee, suggested financial companies should not have to spin off their derivatives businesses, as a Senate provision would have them do.

The average is down more than 10 percent in just the past month.


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