Economy Fears Knock Stocks
Stocks ended mostly lower Friday for a second day, as worries about the economy and the financial system caused some investors to pull back from risk-taking.
The Dow Jones industrial average lost 49.36 points, or 0.5%, to 10,140.12, on top of Thursday’s slide of 110 points. The blue-chip index fell 2% for the week, after three weeks of gains.
The Standard & Poor’s 500 index also lost 0.5% on Friday, falling 5.31 points to 1,154.05. It slid 1.5% for the week.
In a surprise, many technology stocks attracted buyers even as the broader market -- and particularly commodity-related stocks -- declined.
But losers still outnumbered winners by 2 to 1 on the New York Stock Exchange and by 5 to 4 on Nasdaq.
In other trading, Treasury bonds continued to benefit as investors sought a haven. The yield on the 10-year T-note slid to 4.12%, down from 4.17% on Thursday and the lowest since Feb. 15. The dollar rallied.
Stocks had failed to advance Thursday even as crude oil prices dropped to their lowest level in nearly three months, and as the government said retail sales rose a surprisingly strong 1.4% in April.
On Friday oil prices were stable, with near-term crude futures inching up 13 cents to $48.67 a barrel. But there was downbeat news on the economy: The University of Michigan’s consumer sentiment index for May was reported at 85.3, a bigger-than-expected drop from 87.7 in April.
Analysts said many investors were concerned that, despite oil’s slide, the economy may continue to soften.
What’s more, rumors of heavy losses at hedge funds in recent weeks have raised concerns that the markets could suffer a large-scale accident that would ripple through the financial system.
“Everybody’s waiting for somebody to blow up,” Ralph Axel, a debt strategist in New York at HSBC Holdings, said of the hedge fund speculation. “Whether it happens or not, it almost doesn’t matter. The market’s front-running that. When there’s rumors there’s fear.”
But those worries haven’t hurt the dollar, which Friday hit six-month highs against the euro and the Canadian dollar. The euro fell to $1.263 from $1.27 on Thursday; the dollar rose to 107.28 yen from 106.72.
Tech stocks also are in demand again. The tech-heavy Nasdaq composite index added 12.90 points, or 0.7%, to 1,976.78 on Friday, and was up 0.5% for the week.
“It’s a kind of Friday the 13th reversal of fortune, where you’re seeing oil drop off and the tech sector take off,” said Bryan Piskorowski, an analyst at Wachovia Securities.
He said the stock market’s moves this week could signal a healthy “rebalancing” of investors’ portfolios, out of high-flying commodity shares and into laggards like tech. That could be a sign that the market overall is setting up for a rally, he said.
Among Friday’s highlights:
* Energy and other commodity-related stocks continued to bear the brunt of the selling. Occidental Petroleum fell $1.45 to $66.25, lumber firm Weyerhaueser dropped $1.54 to $62.86, Dow Chemical was off $1.08 to $45.07 and Mittal Steel gave up 77 cents to $24.05.
* Utility stocks also were hammered. Many utility companies have oil and gas subsidiaries. TXU slumped $3.80 to $77.07, Dominion Resources lost $1.11 to $69.22 and Exelon fell $1.75 to $45.25.
* Tech stocks were helped by Dell’s report Thursday of a 28% jump in first-quarter earnings. Dell shot up $2.72 to $39.33.
Semiconductor stocks were strong. International Rectifier gained $1.40 to $43.86 and Broadcom soared $1.98 to $33.86. Intel rose 28 cents to $25.12, its highest closing price since July. It is up 7.4% this year compared with a 4.8% decline for the S&P; 500.
Nvidia, which makes computer-graphics chips, jumped $2.54 to $25.33 after reporting strong first-quarter earnings.
* Warner Music Group fell 14 cents to $15.96, its third straight decline after going public Wednesday at $17 a share.
