Prices on the New York Stock Exchange turned mixed Monday in an explosive session marked by wild swings and voluminous trading in Wall Street's first session since the Friday the 13th mini-crash.
Government officials moved quickly to assure investors that measures had been taken at the nation's exchanges to prevent a replay of the October 1987 stock market crash.The Dow Jones industrial average, which plunged 190.58 Friday, was ahead by 36.27 to 2605.53 at 2 p.m. EST. The Dow sunk by as much as 50 points in the first half-hour and then sprang higher in volatile trading that whipped the blue chip indicator back and forth.
Analysts said computerized-program buying and bargain hunting by institutions sparked a rebound in blue chip issues.
"This is a move to quality blue chips by institutions," said Hildegard Zagorski, market analyst with Prudential-Bache Securities Inc.
But the broader market lagged behind the Dow, with declines leading advances by 1,149 to 531 among the 1,940 issues crossing the NYSE tape. The price of an average NYSE common share was up 28 cents.
Volume had rocketed to 330 million shares by 2 p.m. - a heated rise from the 117 million shares exchanged in the same period Friday.
The NYSE tape was running only several minutes late after being behind around 20 minutes during the first hour because of the crush of orders.
Fed Chairman Alan Greenspan told a bankers convention in Washington, "We maintain particular surveillance overnight of Asian and European markets and have kept in productive contact with our counterparts abroad."
Traders in Salt Lake City started Monday swamped with sell orders but emerged at midday pleasantly surprised as the market rebounded with a surge of bargain buys.
The immediate dive of more than 63 points in the first half-hour was expected by a pent-up backlog of sell orders over the weekend. "But I had no idea it would move up like it did," said Mike Tullis, vice president of the local office of Smith Barney.
"We are extremely encouraged by what we see. Investors seem to recognize that falling stock prices aren't always disasters but can provide some bargains."
Within seconds of the initial decline, Tullis said, some "incredible buys became available and evaporated in seconds," causing an abrupt increase in the market.
Despite the positive early performance, the wild gyrations also could signal some uncertainty about where the market will ultimately close.
"I don't believe we are out of the woods yet," said one broker, who declined to be identified. "We would have preferred not to see it go up so fast. It could mean some more profit selling, driving the market back down again."
The initial decline was driven by sell orders that flooded the lines of mutual fund companies across the country over the weekend. But Larry Mulcock, Salt Lake manager of Fidelity Investments, one of the country's largest mutual fund companies, reported "very little" activity regionally compared to the massive crash two years ago.
Sell orders have outpaced purchases, Mulcock said, but many people who pulled out in 1987 never returned, while those who stayed are more savvy.
Fidelity's local telemarketing operation handles calls from a multistate region. Mulcock said administrators stepped in Monday to beef up the early shift to 40 operators and assist in handling a morning deluge.
President Bush said Monday he was not worried about Friday's steep decline and said that the appropriate federal agencies were monitoring the situation.
"I'm not worried . . . the Federal Reserve and the SEC and the secretary of the Treasury are monitoring the situation, and that's where it stands right now," Bush told reporters.
The New York Stock Exchange opened its computers to receive orders at 7:30 a.m. EDT, an hour earlier than usual, because of the expected heavy volume.
The NYSE offered its individual express delivery service when trading began, which puts individual orders of up to 2,099 shares ahead of big, institutional orders. Normally, the service is offered only once the Dow moves up or down 25 points.
A system of "circuit breakers" installed following the 1987 crash automatically halts stock trading temporarily if the Dow rises or falls 250 points from the previous session's close.
Stock prices had crumbled Friday as fears about the future of takeover activity overwhelmed the market after the proposed $6.75 billion buyout of UAL Corp. unraveled when the pilot-management group seeking to acquire United Airlines' parent could not come up with sufficient financing for the deal.
After a delay, UAL stock opened down $55 to $224.75 a share. Representatives of UAL management and the United Airlines pilots union worked furiously Monday to revive their buyout.
Scores of tourists lined up outside the New York Stock Exchange, hoping to get an eyewitness view of the trading spasms.
"I feel like I'm watching a car accident," said John Egan, 24, a New Yorker waiting outside the visitor's gallery.
Tan-coated NYSE sentries guarded the building's entrances amid the skyscraper canyons of Manhattan. About 20 New York police on motorcycles and horseback deployed themselves nearby.
"No matter how you see it, something sudden and very important happened on Friday," said John van Rosendaal, 26, a Columbia University student, from Utrecht, Netherlands. "Something big's happening, and I want to be there when it does."
Across the street, about 15 scraggly anarchist squatters from a nearby park carried placards that read "sell today, jump tomorrow." A few shouted, "Watch for falling stockbrokers!"