NEW YORK -- If there was a glimmer of good news in Friday's catastrophic stock market sell-off, it came in the final hour of trading.
The Dow Jones industrial average, down more than 700 points in late afternoon, clawed about 100 points higher by 4 p.m. when the closing bell rang at the New York Stock Exchange."The close was vitally important," said Gary Kaltbaum, chief technical analyst at J.W. Genesis Securities in Boca Raton, Fla. "For several days, we saw selling peak in the last hour as major institutional investors just got out of the way."
On Friday, the institutional investors appeared to be responsible for the late-hour upturn.
That very modest move higher could have been a sign that after the worst week in Wall Street history, investors are ready to return in search of bargains, some market analysts said. But others aren't as certain investors will be ready to jump back in.
The Dow industrials lost a record 805.71 points, or 7.3 percent, last week, while the NASDAQ composite index shed a record 1,125.16 points, or 25.3 percent.
Past market dips have given a nation mad for stock investing the chance to buy highly regarded stocks at more-affordable prices. Bargain-hunting investors were largely responsible for lifting the market out of steep corrections in 1997 and 1998.
But last week, buyers were hard to find. The utter lack of enthusiasm left some analysts pessimistic about the market's chances come Monday.
"It's not a funeral. But it is a crisis," said Jim Griffin, chief investment strategist at Aeltus Investment Management in Hartford, Conn.
The market faces several potential roadblocks to a Monday morning advance. For one thing, margin calls, which contributed to the steep declines of the past two weeks, could draw more money from the market.
In recent sessions, brokerages have been calling clients to demand cash to cover accounts that were pumped up with borrowed money. In many cases, the stocks bought on margin are the ones that have been tanking, and traders can't find buyers for those shares to raise the needed cash.
Some traders said margin calls may have peaked last week, as brokerages targeted clients that had relatively large margin positions. Meanwhile, investment advisers are hoping that the market's rout has taught clients the danger of buying stocks on credit.
"Margin is only for those with a long-term investing horizon who can afford to lose money if the market moves decidedly against them," said Gregory R. Spear, editor of The Spear Report published in West Hartford, Conn.
Financial markets have a four-day week, closing for the observance of Good Friday.
In those four days, a large number of companies will report their first-quarter earnings, and signs of strong earnings growth could at least help stabilize the market, analysts said.
But it's a quiet week for government economic reports, and that could make it difficult for stocks to advance sharply.
Last Thursday and Friday, signs of
inflation that emerged in the government's Producer Price Index and Consumer Price Index sparked heavy selling. With those two reports still fresh in investors' minds, many won't want to take a chance on jumping back into the market, some analysts believe.
Ultimately, the market may turn on emotion. Investors may return on Monday chastened, but with more realistic expectations for their stock portfolios, Griffin said.
"Those who in all innocence thought the market was a one-way street of 20 percent-plus annual returns may have lost that innocence in the lurid action of the past several weeks," he said.
President Clinton weighed in on Saturday, saying the investment climate and markets "will take care of themselves. I think that they'll go up and they'll go down but I think long-term trends are quite positive."