Wall Street: Wednesday close

A late buying frenzy sent Blue Chips soaring to their biggest gain in nearly three months and erased some of the damage from two days of steep losses. The Dow Jones Industrial Average, off 250 points in the past two sessions, snapped back 196.03 points or 2.01% to 9,941.17. The Nasdaq Index, down 3% on Tuesday, rebounded 24.98 points or 1.43% to 1,775.58.

Analysts said the surprise rally may have come either from short sellers covering their positions after the recent drop or by surging optimism that the worst of the accounting flap dubbed Enronitis might have run its course.

But the accounting saga played on for one former high-flying tech company. Shares in business software maker Computer Associates plunged $4.40 or 17.4% to $20.91 on newspaper reports that the FBI and the US Attorney's office had launched investigations into whether it had inflated profits to help pad executive bonuses. CA, which denied knowledge of the inquiries, is headed by Charles Wang, 56, who has topped best-paid executive lists based on an incentive scheme adopted by the company several years ago. In 1999, Wang's compensation including pay, bonuses and share options topped $650m. Last year, when CA's shares were cut in half, he was rewarded to the tune of nearly $120m.

Shares in companies drawn into the general bookkeeping examination were mixed. Conglomerate Tyco International regained 65 cents or 2.3% to $28.75. IBM, which has lost 20% of its market value in the past month, gave back another 23 cents or 0.2% to $99.31. General Electric, which said that it would issue more details of its accounting, surged $1.17 or 3.2% to $37.57.

Financial services shares hit by worries over their exposure to Enron and other risky businesses rebounded from selling of the past few sessions.JP Morgan clawed back 38 cents or 1.3% to $29.41. Citigroup added $1.30 or 3% to $43.52.

A belated downgrade from noted internet analyst Holly Becker at Lehman Brothers weighed on AOL Time Warner. AOL shares dipped $1.32 or 5.2% to $24.20, near a three-year low.

Techs turned higher near the close with Oracle climbing 72 cents or 4.9% to $15.51 on a broker upgrade. Sun Microsystems, down 6.4% on Tuesday, recovered nine cents or 1% to $8.42.

Diversified manufacturer TRW fell $2.95 or 7% to $38.80 as it lost its chairman and chief executive to Honeywell, which rose $1.85 or 5.7% to $34.50.

Among Dow components, Walt Disney snapped back $1.47 or 6.4% to $24.33, General Motors gained $2.27 or 4.5% to $52.28 and Eastman Kodak strengthened $1.15 or 3.9% to $30.72.