* Euro weakness sparks late selling
* Late-day volatility continues
* Dow down 0.7 pct, S&P 500 off 0.6 pct, Nasdaq off 0.7 pct
* For up-to-the-minute market news see []
(Updates close with context on Dow's close below 10,000 in
paragraph 2)
By Chuck Mikolajczak
NEW YORK, May 26 (Reuters) - Wall Street staged yet
another late-day reversal on Wednesday to end lower as news
suggesting China was reassessing its euro-zone debt holdings
pushed investors into profit-taking mode.
The Dow closed below 10,000 for the first time since Feb.
8. The late turnaround in stocks showing investor psyche
remains fragile, and investors are inclined to sell strength
in this volatile rumor-driven market.
The Financial Times said representatives of China's State
Administration of Foreign Exchange, which manages the reserves
under the country's central bank, has been meeting with
foreign bankers in Beijing in recent days to discuss the
issue. For details, see []
"There is still nervousness out there. Yesterday's
turnaround does not mean the market correction is over or that
investors are confident about the direction of European policy
or the success of European policy," said Tim Ghriskey, chief
investment officer of Solaris Asset Management in Bedford
Hills, New York.
The S&P 500 has fallen more than 10 percent from a closing
high on April 23, putting the benchmark index into correction
territory.
Large-cap liquid holdings, including Microsoft Corp
<MSFT.O> and McDonald's Corp <MCD.N>, led the Dow lower as the
software giant's stock dropped 4.1 percent to $25.01 and the
fast-food restaurant operator lost 2.7 percent to $66.01. At
the same time, Apple Inc <AAPL.O>, which shed 0.5 percent to
$244.11, managed to surpass Microsoft to become the second-
largest company in market cap behind Exxon Mobil Corp
<XOM.N>.
The Dow Jones industrial average <> dropped 69.30
points, or 0.69 percent, to 9,974.45. The Standard & Poor's
500 Index <.SPX> fell 6.08 points, or 0.57 percent, to
1,067.95. The Nasdaq Composite Index <> lost 15.07
points, or 0.68 percent, to 2,195.88.
SWING TIME ON WALL ST
Late-day volatility has been a hallmark during the recent
slide on Wall Street, with investors quick to pull the trigger
at the slightest provocation. On Tuesday, Wall Street staged a
furious rally toward the end of trading to reverse initial
declines of more than 3 percent.
The CBOE Volatility index <.VIX>, or VIX, known as Wall
Street's fear gauge, fell more than 13 percent earlier in the
session when stocks were gaining. By the close, though, the
VIX had shifted gears, rising 1.2 percent to end at its high
of 35.02.
"It really seems like the same old thing," said Ryan
Detrick, senior technical strategist at Schaeffer's Investment
Research in Cincinnati, Ohio.
"This is the kind of intraday volatility that we will be
seeing continuously."
HOME SALES LIFT BUILDERS' STOCKS
Earlier in the session, data showed sales of new U.S.
homes hit their highest level in nearly two years in April as
buyers rushed to take advantage of an expiring government tax
credit. []
The Dow Jones U.S. Home Construction index <.DJUSHB> added
0.3 percent, while the PHLX Housing Sector index <.HGX edged
up 0.2 percent.
Luxury home builder Toll Brothers Inc <TOL.N> gained 0.8
percent to $20.78 after it said its quarterly loss narrowed
from the previous year. For details, see []
Elsewhere on the economic front, orders for durable goods
rose in April to their highest level since September 2008.
Volume was solid, with about 12.44 billion shares traded
on the New York Stock Exchange, the American Stock Exchange
and Nasdaq -- well above last year's estimated daily average
of 9.65 billion.
Advancing stocks outnumbered declining ones on the New
York Stock Exchange by a ration of about 3 to 2, while on the
Nasdaq, nearly five stocks rose for every four that fell.
(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)
