Key Indexes Drop for a Second Week
Stocks on Friday ended the week as they began, with a sharp sell-off.
Investors were concerned that a government report showing a drop in wholesale prices in November could fan worries about deflation.
The news hammered the dollar and took stocks down as well.
The Dow industrials slid 104.69 points, or 1.2%, to 8,433.71, and dropped 2.5% for the week.
The Nasdaq composite slumped 37.13 points, or 2.7%, to 1,362.42, and was down 4.2% for the week.
Losers topped winners by 2 to 1 on the New York Stock Exchange and on Nasdaq.
It was the second weekly decline for key indexes, after the strong rally that lifted stocks from five-year lows in October.
The government said wholesale prices as measured by the producer price index fell 0.4% in November.
Falling wholesale prices -- assuming they show up in lower retail prices -- are one of the few benefits for consumers during a weak economy. But businesses whose product prices are declining can feel even more pressure on already strained profit margins, analysts noted.
The report overshadowed the University of Michigan’s report that its closely watched U.S. consumer confidence index rose in the early part of this month.
“The economic data, you can say, has been mixed. You don’t get the feeling that it is positive” on balance, said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee.
With many investors concerned that a war with Iraq is inevitable, the strength that usually marks stock trading in December has been missing this year, analysts said.
Foreign investors appeared to show an aversion to U.S. assets Friday: The dollar fell to its weakest level in almost three years against the euro and also dropped against the yen.
The euro ended at $1.02 in New York, up from 99.7 cents two weeks ago. The dollar ended at 120.47 yen, down from 124.45 two weeks ago.
But European stock markets were weak as well. The German market slid 1.1% and the Dutch market lost 2.2%.
Big-name U.S. stocks closing lower included Microsoft, down $1.67 to $52.50; Target, down $1.73 to $30.97; and General Motors, down 92 cents to $36.52.
In the tech sector, Cirrus Logic tumbled $1.18 to $3.08. The chip maker said sales this quarter would be below expectations.
Some worried investors continued to turn to gold. Near-term gold futures prices in New York surged $6.60 on Thursday and continued the advance on Friday, rising $1.80 to $333.20 an ounce, a five-year high.
That bolstered gold mining stocks. ASA jumped $2.15 to $39.30, Newmont Mining gained 89 cents to $29 and Placer Dome was up 39 cents to $11.36.
In other commodity trading, crude oil futures rose to an eight-week high as a nationwide strike aimed at ousting Venezuelan President Hugo Chavez limited shipments to refineries from the world’s fifth-biggest oil exporter.
The U.S. is “deeply concerned” about the deteriorating situation in Venezuela, White House spokesman Ari Fleischer said.
In New York, oil futures rose 43 cents to $28.44 a barrel. Natural gas futures also rallied anew, hitting a 20-month high, on fears that gas supplies are being drawn down at a rapid pace because of cold weather.
Most energy stocks, however, failed to get a lift from the gains in oil and gas.
