Investors breathed a temporary sigh of relief as the Dow rebounded in Thursday afternoon trading to close up as financials continued to display their weakness and two big tech companies spurred some activity in the quiet M&A market. A triple-digit deficit in the afternoon was erased by investors looking for bargains. Overall, the Dow closed up 172.04, or 2.02%, to 8,691.25, while the Nasdaq slipped 11.84, or 0.73%, to 1,603.91.
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The financial sector continued to scare away investors as Goldman Sachs Group Inc. announced plans to lay off 10% of its work force. The news was a market confidence crusher considering the firm was the last traditional investment bank to register a profit.
Elsewhere in the financial services sector, home and auto insurer AllState Corp. fell as much as 8% after reporting a surprising third-quarter loss of $923 million, blaming big payouts from hurricanes Gustav and Ike and an $8.6 billion decline in its investment portfolio. With peer American International Group Inc. already in trouble, the rest of the insurance industry has been in the spotlight lately as the next sector to take a fall from the global credit crisis.
Meanwhile, on the tech front, Google Inc. slipped slightly as the Russian Federal Anti-Monopoly Service blocked the online giant's proposed $140 million purchase of online ad service ZAO Begun. Google had expected the deal to be approved by the third quarter, but the disappointment would likely not derail the cash-flushed company's ambitions for expansion in Eastern Europe and Russia.
On the opposite side of the spectrum, Sun Microsystem Inc.'s ranks fell by one as company co-founder Andy Bechtolsheim announced he is departing. The exit is a blow to the struggling technology company, which has failed to regain its dominance of the dot-com sector that it enjoyed a decade ago. Experts speculate that Sun may be a takeover candidate with its weak stock price hovering around $4 a share. - Gerald Magpily
