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article imageDow Dives Yet Again After Rally

By Tse Hao Guang     Oct 16, 2008 in Business
Hopes for further gains were high on Monday with the Dow Jones' impressive rally. Today however those hopes were dashed as the stock market continues on a roller coaster ride.
The Dow Jones industrial average plunged over 700 points, the second largest point decline ever.
The Dow closed at 733 points down or 7.9%, at 8,577.91, following a major sell-off in the last half hour of trading. The dive followed Monday's record 936-point rally.
Todd Leone, a managing director of Cowen and Co, said: "Today, it just seems like there's no catalyst for anyone to buy any stocks. ...I think investors don't know what they want to do."
The Nasdaq also fell 151 points or 8.5% to 1628.33, while the S&P 500 Index dropped 90 points or 9% to 907.83.
This latest fluctuation is mostly being blamed on jittery investors who decided to take profits after the rally.
"There's a tendency to say, 'OK, the market's up a little bit, it's up 10 percent. Let me get out and never hear about this again,'" said Stephen Leeb, chairman of the investment committee at Leeb Capital Management.
Market rallies in 1974 and 1987 were also followed by drops, noted Leeb.
"Initial rallies off major lows almost always are tested. This so far is not out of the ordinary -- it's more or less what you'd expect to see happening," he said.
There is a silver lining to this dark cloud, however.
Stock gains by Wells Fargo and Coca Cola due to positive earnings reports encouraged Leeb.
"Last week, when the market was going down in its most intense way, I don't think anything was able to boost the market, able to boost a particular stock," he said.
Leone also noted that ups and downs were an expected part of market recovery.
"When you're trying to make a bottom, you don't go straight up. There's a lot of back and fill and a lot of consolidation and I think that's what we're seeing today," he said.
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