Stocks take early dive, then bounce back

NEW YORK - Wall Street closed mixed Tuesday, recuperating from a sharp plunge as investors snapped up bargain stocks on rumors that a bond insurer rescue plan is progressing and on upbeat comments from Cisco Systems Inc.

Earlier in the day, the market sank after Merrill Lynch lowered its full-year earnings prediction for Citigroup Inc., which a Dubai fund executive said will need to raise more cash to stay in business.

But in afternoon trading, the financial sector regained some steam after CNBC reported that a plan to save the bond insurer Ambac Financial is advancing nicely.

Tech stocks rebounded too after a Dow Jones Newswires report that Cisco CEO John Chambers said he is "even more comfortable" with the long-term growth targets the company has outlined.

The Dow Jones industrial average closed down 45.10, or 0.37 percent, to 12,213.80, after tumbling more than 200 points earlier in the day.

The Standard & Poor's 500 index fell 4.59, or 0.34 percent, to 1,326.75, while the Nasdaq composite index rose 1.68, or 0.07 percent, to 2,260.28.