NEW YORK — The financial markets saw some relative calm Wednesday as investors uneasily awaited a Senate vote on the banking-bailout plan, with Wall Street falling only moderately and the credit markets still showing signs of strain.
The Dow Jones industrials zigzagged during the session, losing more than 200 points in early trading but closing down about 20 — far from the huge swings the blue chips saw during the first two sessions of the week.
Many investors were reluctant to make any major moves before the vote expected Wednesday night on a revised version of the plan defeated earlier this week by the House.
The new proposal includes tax breaks for businesses and the middle class and increases deposit insurance.
While they waited, the markets absorbed economic data that were a reminder of the impact of the credit crisis. In an assessment of the manufacturing sector in September, the Institute for Supply Management revealed a troubling drop in new orders, which portends a continuing slowdown in the months ahead. The trade group’s overall index of manufacturing activity fell to 43.5 in September from 49.9 in August. Wall Street had expected a reading of 49.5, according to economists polled by Thomson/IFR.
“We’re now seeing in those numbers that we’re getting a contraction in economic activity,” said Jim Dunigan, managing executive of investments at PNC Wealth Management.
At this point in the credit crisis, weak economic numbers are coming as no surprise to Wall Street — but September’s data are expected to be particularly bleak, reflecting the seizing up of the credit markets that began during the month.
The Dow fell 19.59, or 0.18 percent, to 10,831.07. Broader stock indicators were narrowly lower. The Standard & Poor’s 500 index fell 5.30, or 0.45 percent, to 1,161.06, and the Nasdaq composite index fell 22.48, or 1.07 percent, to 2,069.40.
Charles Widger, chief executive of Brinker Capital, said the bailout would help restore faith in the U.S. financial system.
Champions of the plan say it is necessary to absorb the soured mortgage and other bad debt from banks’ books as a way to restore faith in the credit markets, while detractors say the plan is too costly and risky.
