Dow, S&P rise as Nasdaq falls

Wall Street is living up to predictions that trading will remain volatile.

NEW YORK (AP) — Wall Street spent another session buffeted by volatility Thursday, this time closing mixed after investors wrestled with their fears about the economy but also looked for bargains after two days of selling. Though the Dow Jones industrials and Standard & Poor’s 500 index rose sharply, a downdraft in tech stocks left the Nasdaq composite index with a loss.

Buying came in spurts and then tended to quickly evaporate as investors fretted that the economy is either in a recession or headed for one. Investors tended to gravitate toward big-name stocks seen as safer bets after a two-day selloff that sliced nearly 750 points from the Dow.

“I think that people feel that it’s got to stop sliding someplace and they’re looking basically for bargains,” said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York. “The analogy I’m using right now is that you can buy a BMW at Toyota prices. But there is still concern that better bargains can be had.”

With its gyrations, Wall Street is living up to predictions that trading will remain volatile as investors try to test whether the market has formed a bottom.

Manny Weintraub, president of Integre Advisors in New York, said several of the market’s attempts to rally have been short-circuited by sellers who had awaited an opportunity to cash out and that some investors looking to snap up inexpensive stocks are worried about getting burned by further declines.

“A lot of bargain hunters came in last week and now that money has been spent and they can’t hunt twice,” he said.

Wall Street’s jitters came as investors tried to extract clues about where the economy is headed from a mix of corporate news.

Goldman Sachs Group Inc. is preparing to cut about 10 percent of its work force, according to a person briefed on the plan who requested anonymity because the company hadn’t publicly disclosed details of the plan. Dow Chemical Co. said its quarterly profit rose 6 percent, helped by price hikes that offset a nearly 50 percent increase in raw materials and energy costs.

A snapshot of the labor market signaled highlighted one of investors’ worries about the fragility of the economy. The Labor Department reported Thursday that new applications for unemployment benefits rose 15,000 last week to a seasonally adjusted 478,000. That was slightly above analysts’ estimates of 470,000. Jobless claims above 400,000 are considered a sign of recession.

Investors viewed the data as more evidence that the financial crisis is battering the economy and forcing companies to cut back.

Thomas J. Lee, U.S. equities strategist at JPMorgan Chase & Co. in New York, cautioned that Wall Street will need to rein in its sharp swings before some investors will feel confident enough to return.

“I don’t think anyone can buy and sell stocks right now with conviction,” he said.

The Dow rose 172.04, or 2.02 percent, to 8,691.25, after rising 277 points and falling by 276 points during the session. On Wednesday, the Dow lost 514 points as investors worried that the global economy is poised to weaken. That was on top of a 231-point loss Tuesday.

Broader stock indicators were mixed Thursday. The Standard & Poor’s 500 index rose 11.33, or 1.26 percent, to 908.11, and the Nasdaq fell 11.84, or 0.73 percent, to 1,603.91.