Stocks regain some ground in volatile session

NEW YORK -- Stocks finished a turbulent session mostly higher Wednesday after the Federal Reserve's latest assessment of the economy reassured investors who were still uneasy after Tuesday's huge

Thursday, March 9th 2000, 12:00 am

By: News On 6

NEW YORK -- Stocks finished a turbulent session mostly higher Wednesday after the Federal Reserve's latest assessment of the economy reassured investors who were still uneasy after Tuesday's huge sell-off.

The Dow Jones industrial average rose 60.50 to close at 9,856.53, recovering some of the 374 points it lost Tuesday.

The Nasdaq composite index, which had tumbled as much as 125 points in early trading Wednesday, finished up 49.42 at 4,897.26.
Broader stock indicators were mostly higher, with the Standard & Poor's 500 up 11.08 at 1,366.70.

But declining stocks were ahead of advancers on the New York Stock Exchange and the Nasdaq, a sign that investors remained on edge.

The market showed signs of stabilizing in the morning and afternoon although the Dow and the Nasdaq changed direction several times while investors, still stunned by Tuesday's profit warning from Procter & Gamble, tried to determine their next moves.

The Nasdaq was in negative territory much of the time.

But in late afternoon, some of the market's gains solidified after Fed economists released their Beige Book survey of economic conditions.

The Fed found that although workers' wages are rising, there is little evidence of inflation in the overall economy.

The report, which central bankers will consider when they meet March 21 to discuss their interest rate policy, calmed investors' fears that rates are headed sharply higher.

The Fed has raised rates four times since June, and Chairman Alan Greenspan has made no secret of his willingness to raise rates further to slow the economy.

Interest rate concerns have undermined industrial and financial stocks for weeks, bringing the Dow down sharply from the closing high of 11,722.98 that it set in mid-January. With such an atmosphere of uncertainty, Procter & Gamble's warning Tuesday that higher costs for raw materials would depress its earnings completely unnerved investors; they became convinced that profits would suffer at other companies as well.

Procter & Gamble remained out of favor Wednesday, falling $2.66 to $57.66.
Some analysts said investors seemed to believe the blue chips had paid too great a price for Procter & Gamble's warning.

"There was no sense to the magnitude of the sell-off," said Brian G. Belski, chief investment strategist at George K. Baum & Co. in Kansas City, Mo. "It was an overreaction that has really created some good buying opportunities."

The market was also listening closely Wednesday morning as Mr. Greenspan spoke to a banking conference in San Antonio. The Fed chairman warned banks to maintain their lending standards even in the face of strong economic conditions.

Mr. Greenspan's speech contributed to some nervousness, traders said. While Mr. Greenspan did not discuss interest rates or monetary policy, he repeated his concerns about Americans' inflated expectations for the economy.

"We have seen growing evidence of credit granted solely on the expectation that current robust conditions will continue indefinitely, with little thought as to how borrowers might perform under more stressful conditions," Mr. Greenspan told the group.

Declining issues outnumbered advancers 10-to-9 on the New York Stock Exchange. On the Nasdaq, five stocks fell for every four that rose.
NYSE volume totaled was up from the previous session.