Stocks nearly pull off a comeback

Stocks tried to make a major comeback this afternoon -- and very nearly succeeded.

But the rally faded in the last hour of trading and will add to Wall Street's jitters going into the weekend.

At the close, the Dow Jones Industrial Average was down 36 points to 12,233, its sixth loss in the last seven trading sessions. The Nasdaq Composite was down nearly 10 points at 2,406, and the Standard & Poor's 500 Index was down 3.7 points at 1,403.

After the close, shares of Dell Inc. (DELL, news, msgs) fell after missing Wall Street revenue estimates. Earnings were better than expected.

The close capped a day of volatility set off by continued weakness in Asian markets. The Nikkei 225 Index ($N225) was down 150 points, and the Shanghai Composite Index, whose 8.8% drop on Tuesday set off a near-panic globally, was down 2.9%.

That uncertainty caused U.S. stocks to plunge at the open. Then the market turned on a bullish report on manufacturing from the Institute for Supply Management. At around 3 p.m., all three major indexes were actually in the black.

But a jump in oil prices prevented the market from jumping into the black for good. Crude oil closed at $62, up 21 cents from Wednesday. Interest rates didn't help either. The 10-year Treasury yield drifted up to 4.556% from 4.55% yesterday.

All day long, bullish market experts and the Bush administration tried to calm the market as it careened up and down, saying the U.S. economy was strong and showed no signs of falling off a cliff. Even former Federal Reserve Chairman Alan Greenspan got into the act. Three days after he talked about the "possibility" of a recession this year, he told an audience in Tokyo that a recession, while possible, was "not probable".

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Still, when all was done, the U.S. stock was not exactly robust. Thirty-six of the 42 indexes that Market Dispatches tracks were down on the day, and only 10 of the 30 stocks in the Dow were higher -- led by Citigroup (C, news, msgs), up 1.4% to $51.08. Intel (INTC, news, msgs) was the laggard, down 1.4% to $19.59. Intel is the second-biggest loser on the week, down 5.6% so far, just ahead of General Motors (GM, news, msgs), down 7.9%.

The S&P 500 offered a picture of the breadth of the day's worries. A total of 325 stocks in the index were lower. Volume again was big with more than 2.2 billion shares changing hands on the New York Stock Exchange and 2.7 billion shares on Nasdaq.

Dell shares off on revenue miss

Dell shares fell to $22.61 after the personal computer giant reported quarterly earnings that topped Wall Street's average estimate. Revenue, however, was short of expectations.

Net income for Dell's fourth quarter, ended Feb. 2, was $673 million, or 30 cents a share, ahead of Wall Street estimates but down 35% from a year ago. Revenue of $14.4 billion was under the Wall Street estimate of $14.7 billion and down 5.3% from a year ago.

The company had said in January it likely would miss analysts' average earnings estimates for the quarter.

Dell described the results as preliminary because it is reviewing its past accounting and may have to restate results, including the prior-year period. The Round Rock, Texas, company said last year the Securities and Exchange Commission and federal prosecutors were investigating its accounting.

It also didn't offer any guidance of future earnings.

• Video: CNBC's staff discuss the Dell report.

An insider trading scandal erupts on Wall Street

Prosecutors in New York said they've broken up what they call one of the biggest Wall Street insider-trading rings since the 1980s: a sweeping, $15 million scandal that involved lawyers and power brokers at some of the nation's top financial firms, including Morgan Stanley (MS, news, msgs) and UBS Financial Services (UBS, news, msgs).

In all, authorities charged 13 people with running an insider trading ring that netted at least $15 million in illegal profits. They face charges ranging from conspiracy to commit securities fraud, which carry potential penalties of up to 25 years in prison.

The defendants included husband-and-wife lawyers, registered representatives, compliance personnel and hedge fund portfolio managers who improperly relied on hundreds of tips during five years of illegal trading, she said.

"This conduct didn't occur in obscure boiler rooms -- but rather at what are commonly considered `top tier' Wall Street firms," said Linda Chatman Thomsen, director of the Division of Enforcement for the Securities and Exchange Commission.

Nine have been arrested so far, and four have already pleaded guilty.

Among financial professionals charged criminally in U.S. District Court in Manhattan was Mitchel Guttenberg, who worked in UBS's equity research department. Prosecutors said he accepted hundreds of thousands of dollars as he sold nonpublic information to two men on upcoming upgrades and downgrades by UBS analysts, U.S. Attorney Michael Garcia said.

The men, David Tavdy and Erik Franklin, used the UBS inside information to each earn more than $4 million in securities trades.

Guttenberg pleaded not guilty in federal court in Manhattan Thursday and was released on $500,000 bail. He declined to comment afterward.

UBS and Morgan Stanley said they are cooperating. Morgan Stanley shares were up slightly today to $75.09; UBS was down 0.6% to $58.75.

It's been a very rocky week

It wasn't just the manufacturing index's number that helped the markets pull away from their lows, CNBC's Rick Santelli said today.

Traders don't want the media to say the manufacturing report was the white knight that saved the market this morning, noted Santelli, who reports from the Chicago Board of Trade. "The markets reversed before ISM. Stocks were already heading up."

Warren Myers, a New York Stock Exchange trader at Walter J. Dowd, told CNBC that "the storm is not over yet, but we've weathered it." He said the problem is that anything unexpected could hammer this market because it's walking on eggshells.

"I wouldn't call this a correction today; it's a slight pullback," Myers said. "I think we can we can bounce off of here."

Even bulls expected this volatility and possibly a further drop in the markets, a trader at the Chicago Mercantile Exchange told CNBC this morning. "What you had the other day was an earthquake," explained Jack Bouroudjian, a trader for Brewer Investment Group. "Earthquakes are followed by aftershocks. We're experiencing the aftershocks right now with some of the volatility."

Tuesday's 'round-the-world market plunge erased more than $1 trillion from global equities. With today's fall, the Dow is on pace for the biggest weekly drop since Jan. 25, 2003. The S&P is on pace for the biggest weekly drop since Sept. 21, 2002.

GM sales are up in February; Ford and Chrysler are down

General Motors reported a 3.7% increase in its U.S. sales in February, but two other domestic auto makers posted declines -- Ford Motor Co. (F, news, msgs) sales sank 13.5% while DaimlerChrysler (DCX, news, msgs) posted a 7.7% drop.

GM said consumer demand was strong for its pickup trucks and sport utility vehicles. Wall Street didn't care and knocked the stock down 1.1% to $31.54.

Its fleet sales -- sales to big customers like car rental companies -- dropped 18% last month as a result of a planned 25% reduction in daily rental sales, but the decrease was offset by an 11% increase in retail sales.

Ford blamed its sales performance on a 30% reduction in fleet sales, while German-American DaimlerChrysler cited lower demand for vehicles from its U.S.-based Chrysler Group.

Ford's showing put it in danger of being surpassed by Japanese rival Toyota Motor (TM, news, msgs) for the month.

Meanwhile, Honda (HMC, news, msgs) said its U.S. sales rose 3.2% on stronger sales of its trucks and Nissan (NSANY, news, msgs) said its sales rose 1.2%.

Auto stocks were down today -- including the Japanese auto makers, because of concern about the economy.

What Greenspan said, might have said, should have said

This week's stock-market turmoil was triggered, in part, by a warning from former Federal Reserve Chairman Alan Greenspan. His remarks about the possibility of the U.S. economy heading into a recession by the end of 2007 hit the markets just like his famous "irrational exuberance" warning about the dot-com boom in the late 1990s, when the result was a crash and burn.Yesterday, investors cheered when Greenspan's successor, Ben Bernanke, told the House budget committee that, even with the markets suffering the worst losses since Sept. 11, 2001, nothing had changed. He said the markets were working well and that "there is really no material change in our expectations for the U.S. economy since I last reported to Congress a couple weeks ago."

Late last night New York time, Greenspan spoke again, being a touch more precise. Though it is possible the economy could go into a recession, he said in Tokyo, "I don't think it's probable."

• Video: Should Greenspan pipe down?

"Things look reasonably good in the short run for the U.S. and the world," Greenspan was quoted as saying at a conference. However, he said, "we can't just assume that this extraordinary period of recovery can extend indefinitely."

Some critics were questioning how much the former Fed boss should say -- even whether he should say anything. David Buik of BCG Partners told CNBC this morning that "we respected Dr. Alan Greenspan for 18 years, (but) I think it's entirely inappropriate that he should make any comments at all on the U.S. economy." That's for the current Fed boss, and his name is Bernanke, he said.

Lawmakers question NYSE, Dow Jones on stock drop

Two U.S. House Republicans had questions for the head of NYSE Group (NYX, news, msgs) and Dow Jones (DOW, news, msgs) regarding the two-minute, 200-point drop Tuesday afternoon. That decline caused bargain hunters to jump in, and they helped roll back that day's losses from 500 points to 400 points by the close.

Dow Jones Indexes said a system problem was to blame and that extraordinarily heavy volume caused a 70-minute lag in accurately calculating the value of the Dow. When that lag was fixed, the Dow showed a huge drop.
Reps. Spencer Bachus of Alabama and Deborah Pryce of Ohio asked Dow Jones and the NYSE what measures they are taking to fix the problems. They said Tuesday's plunge "may have been made to appear even more precipitous and alarming to investors because the trading systems did not keep pace with the actual activity," MarketWatch reported.

The NYSE recently introduced a new hybrid electronic trading system, which has caused enormous amounts of messaging traffic, according to CNBC's Bob Pisani.

What was moving today?

Materials stocks were hit again today, after being hammered Tuesday. U.S. Steel (X, news, msgs) was down 1.1% to $87.73, and Rio Tinto (RTP, news, msgs) fell 2.4% to $211.51.

• Video: Jim Cramer's 'buy now' picks

Some tech stocks were faring better today, helped by news on Oracle's (ORCL, news, msgs) buying Hyperion Solutions (HYSL, news, msgs) for $3.3 billion and Carl Icahn's deciding to boost his stake in Motorola (MOT, news, msgs).

Oracle shares were up 2% at $16.77; Hyperion jumped 20% to $51.57.

Oracle CEO Larry Ellison has been aggressively looking to make acquisitions over the past three years, spending more than $20 billion to expand the company's businesses.

Motorola shares were up 1.7% to $18.83 after the company said late yesterday that Icahn and Icahn Partners have filed notices to acquire between $119.7 million and $500 million worth of Motorola stock. Additionally, two Icahn partnerships plan to buy more than $500 million each, although less than 25% of Motorola's shares outstanding.

By Elizabeth Strott and Charley Blaine