NEW YORK — A stock drop is never reassuring — except when it could have been worse.
The Dow Jones industrial average shed 115 points, or 1.5 percent Tuesday. But it also held on to 382 of the 498 points it racked up a day earlier.
Anyone with a 401(k) would have liked to see the rally continue.
Market analysts said, though, that a pullback was expected given the massive gains Wall Street logged the day before when the government released plans to remove bad loans from banks’ books.
“We’ll take that trading pattern any time,” said Arthur Hogan, chief market analyst at Jefferies & Co.
Hogan said he came into work anticipating the Dow to drop as much as 2 percent Tuesday after the index jumped 6.8 percent Monday — its biggest gain since late October.
The Dow was up more than 1,200 points after hitting nearly 12-year lows on March 9, and there was little in a way of positive economic or corporate data Tuesday to lift stocks further.
If Wall Street gets more good news, stocks could resume their rise. But if it doesn’t, the rest of Monday’s rally, and then some, could be wiped out. Investors have been cautious, recalling the 20 percent rise between late November and January that fizzled, with stocks then tumbling to new lows on fears about the economy and the banking system.
Later this week, some big economic reports are scheduled to come out: durable goods for February, a revised fourth-quarter gross-domestic-product number, and personal income and spending for February. And next month, first-quarter earnings reports start pouring in.
Thomas Lee, a stock-market analyst at JPMorgan, said the market’s ability to hang on to most of its rally was encouraging. But, he added, “This has definitely been a show-me market.”
The Dow fell 115.89, or 1.5 percent, to 7,659.97. The index fell in early trading, rose briefly in afternoon trading, and then turned lower again.
Broader stock indicators also tumbled. The Standard & Poor’s 500 fell 16.67, or 2 percent, to 806.25, and the Nasdaq fell 39.25, or 2.5 percent, to 1,516.52.
Before the market’s retrenchment Tuesday, stocks had spiked about 20 percent over the course of 10 days on actions out of Washington and nascent signs of economic renewal.
Phil Orlando, chief equity market strategist at Federated Investors in New York, said many traders are pleased by the government’s plan to help banks but said that signs of an improving economy will be needed for the market to hold its gains. He said nagging worries about big problems such as unemployment could shake investors.
“We are treating this cautiously as we recognize that there are still some storm clouds on the horizon,” he said.
