FIVE TRADING DAYS FIVE TRADING DAYS

Dow Jones industrial average, five days NEW YORK  Wall Street remains skittish but is showing signs of budding investor optimism. After plunging in early trading, stocks closed mixed as investors snapped up bargains on rumors a bond insurer rescue plan and upbeat comments from Cisco Systems and Amazon.com. . Earlier Tuesday, the market sank after Merrill Lynch lowered its full-year earnings prediction for Citigroup (C) and Intel (INTC) lowered its forecast for first-quarter profit margins. At one point, the major indexes each gave up more than 1%, with the Dow Jones industrial average falling about 150 points Merrill Lynch reduced its full-year prediction for Citigroup because it believes the bank could write down another $18 billion of debt tied to souring mortgages, according to Dow Jones Newswires. The stock, one of the 30 companies in the Dow, fell to new nine-year lows, and took other financial stocks down with it. Meanwhile, Intel's decision to lower its forecast heightened worries about the technology industry. Chipmakers are considered an early warning system for troubles throughout the sector. But in afternoon trading, the stock market showed signs of optimism. At the close, the Dow Jones industrial average fell 45.10, or 0.37%, to 12,213.80. In the broader market, the Standard & Poor's 500 index fell 4.59, or 0.34%, to 1,326.75, and the Nasdaq composite index rose 1.68, or 0.07%, to 2,260.28. The financial sector regained some steam after CNBC reported that a plan to save the bond insurer Ambac Financial is advancing nicely. Technology stocks rebounded, too, after a Dow Jones Newswires report that Cisco CEO John Chambers said he is "even more comfortable" with the long-term growth targets the company has outlined, and after Amazon.com's chief financial officer reiterated the online retailer's 2008 revenue forecast. Wall Street is jittery, however, and as the volatility of the past several months has proved, the market's optimism can quickly turn to pessimism from one day to the next. While some investors search for bargains when stocks sink, the overall market is plagued by persistent worries about the bad debt held by the world's banks. "What we're seeing is a very nervous market, and nervousness breeds volatility," said Anthony Conroy, managing director and head trader for BNY ConvergEx Group. "It took years to put this stuff on their books — it's not going to come off quickly." Federal Reserve Chairman Ben Bernanke arned in a speech in Florida Tuesday that more home foreclosures are coming. Meanwhile, Fed Vice Chairman Donald Kohn in prepared remarks to U.S. senators said banks face obstacles, but their cash levels are strong enough to face them. The disappointing earnings forecasts and comments from Fed officials come as Wall Street tries to determine whether the economy is in recession — and whether investors have been a bit too optimistic about companies' profits bouncing back in the second half of the year. "The soft economy creates a difficult profit environment for most firms. And with investors' skepticism at high levels, they are quick to sell," said Alan Gayle, senior investment strategist at Trusco Capital Management. Overseas, Japan's Nikkei stock average edged up less than 0.01%. In afternoon trading, Britain's FTSE 100 fell 1.2%, Germany's DAX index fell 1.3%, and France's CAC-40 declined 1.1%. Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Guidelines: You share in the USA TODAY community, so please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. Use the "Report Abuse" button to make a difference. You share in the USA TODAY community, so please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. Use the "Report Abuse" button to make a difference. Read more