Dow Off 140; Worst Week Since 1933
Stocks slumped again Friday as the Dow Jones industrial average wrapped up its worst week since the Great Depression on growing fears about the U.S. economy and a potentially long war on terrorism after last week’s deadly attacks.
Even a positive earnings forecast from market giant General Electric--although briefly pushing the Dow into positive territory--couldn’t stem the tide of selling.
Likewise, President Bush’s Thursday night speech that sought to rally the nation to the fight against global terrorism failed to rally Wall Street.
“Clearly, this market is event-driven,” said Bill Ryder, strategist at First Union Securities in Richmond, Va. “When the CEO of General Electric came out and said, ‘Hey, we’re going to make our earnings numbers this year,’ the Dow was up for a few minutes in the morning, but the rally didn’t last long.”
As for Bush’s tough-talking speech, it “was kind of scaring the market,” Ryder said.
The Dow closed down 140.40 points, or 1.7%, at 8,235.81. But the blue-chip index did recover some ground from an early 313-point drop.
For the week, the Dow lost 1,369.70 points, or 14.3.%. Since 1915, that was second only to the 15.6% decline in one week of July 1933, during the depths of the Great Depression, according to Bloomberg News.
The technology-laden Nasdaq composite index fell 47.74 points, or 3.3%, to 1,423.19 Friday. For the week, Nasdaq lost 272.19 points, or 16.1%.
The Standard & Poor’s 500 index fell 18.74 points, or 1.9%, to 965.80 Friday and sank 11.6% for the week.
The indexes are now at their lowest levels in nearly three years. And other market statistics showed how severe the week’s decline was.
About $1.4 trillion in investor wealth evaporated during the week, raising fears that consumer spending will drop and add more pressure to the economy.
Three stocks fell for every one that rose on the New York Stock Exchange on Friday--an improvement over the 10-1 ratio in early trading. Volume was extremely heavy at more than 2 billion shares on the NYSE, second only to Monday’s record volume. Losers led winners 2 to 1 on Nasdaq.
Another sign of the heavy selling: One of four stocks that traded on the NYSE posted a new 52-week low.
“Right now, there are just falling knives everywhere,” said Dirk van Dijk, who helps manage $4.5 billion for C.H. Dean & Associates. “Who wants to step in front of a freight train? On Monday, we did some buying. Clearly we were premature.”
GE, a member of the Dow, offered a short-lived respite from the relentless selling after the conglomerate said it was on track to deliver double-digit earnings growth this year. But GE also said that it does not expect an economic rebound next year. GE climbed 93 cents to $31.30.
But most other corporate news has been grim as companies ranging from airlines and publishers to financial services firms and software makers have announced big layoffs. Last week’s terrorist attacks paralyzed the travel industry, aggravated fears of a recession and threatened to damp consumer confidence.
Bargain-hunting among beaten-down stocks helped prop up prices late in the day. Shares of airlines, brokerage firms, hotel companies and oil-field services providers were among the best-performing market sectors.
In other markets, safe-haven bonds and gold gained, as the yield on the benchmark 10-year Treasury note fell to 4.69% from 4.74% on Thursday. The dollar finally found some poise after the Bank of Japan lent support for the greenback. Crude oil fell for a fifth day, closing below $26 a barrel in New York for the first time since mid-July as the global economic slowdown was set to slash demand.
Among the day’s highlights:
* Stocks fell overseas amid uneasiness about U.S. plans to retaliate for the terrorist attacks. Japan’s Nikkei stock average finished the day down 2.4%. Britain’s FTSE index closed with a loss of 2.7%, France’s CAC-40 fell 2.3%, and Germany’s DAX index declined 0.6%.
* EMC fell $1.47 to $11.15 after the data-storage-device firm said it will cut 10% of its work force and probably report a quarterly loss. Also in the tech sector, Palm fell 38 cents to $1.77. The company pulled the plug on plans to launch a highly anticipated wireless hand-held computer this year.
* CVS fell $3.10 to $32.25 after the drugstore chain lowered its quarterly earnings outlook on expectations of slower sales.
Market Roundup, C4, C6
