US stocks first spiralled to year lows yesterday and the Dow Jones industrial average crashed below the psychologically important 10,000 barrier, but solid earnings from Sun Microsystems later helped limit losses. "It was a gut-wrenching opening, but a lot of investors hoped that this represented capitulation lows," said Arnold Berman, technology strategist at Wit SoundView.

Investors, who this year have stomached extreme price swings, in the morning looked into the abyss. Stocks were in a freefall, led by an 18-point drop in the shares of computing titan International Business Machines Corp.

The culprits: disappointing sales growth at IBM reignited fears of slowing corporate profit growth and new data showed higher-than-expected inflation at the consumer price level.

The Dow Jones industrial average in the morning plummeted 438 points, its biggest intraday drop since April 14th, to a 19-month low of 9,651.68.