Wall Street stocks pull out of plunge, stand flat

Updated at: 2338 PST, Thursday, October 16, 2008
NEW YORK: US stocks rebounded from a deep plunge Thursday, passing into positive territory as nervous investors digested more bleak economic news, a day after the worst session in over 20 years for Wall Street.

The Dow Jones Industrial Average was up 16.73 points (0.20 percent) at 8,594.64 around 1635 GMT and the tech-heavy Nasdaq gained 18.07 points (1.11 percent) at 1,646.40.

The broad Standard & Poor's 500 slipped 2.67 points (0.29 percent) to 905.17 points.

The volatile market action came after Wednesday's panic selloff and further declines in world markets including an 11.4 percent drop in Tokyo.

John Wilson, equity strategist at Morgan Keegan, said the downward momentum is being reinforced by big portfolio managers forced to sell as clients pull out funds.

"Margin calls and mutual fund redemptions along with hedge fund redemptions and deleveraging means there is forced selling going on to accompany the selling that is simply a result of fear and capitulation," he said.

"At the same time, there is the uncertainty of how deep the recession could be. It's tough to discount the future when you just don't know exactly how the current situation will unfold."