Dow loses 337 points in another wild day

Hamilton is a Times staff writer.

The stock market rebound lasted a grand total of three hours.

After rocketing in a furious rally Thursday afternoon that briefly rekindled investor spirits, the market resumed its slide Friday amid the latest evidence of rapidly declining consumer spending.

The Dow Jones industrial average sank 337 points -- handing back more than half of the previous day’s 552-point advance. The entire drop occurred in the final 45 minutes of trading, a lightning-fast decline even given the market’s recent volatility.


“We remain in a severe bear market, and we may be approaching, or in the midst of, a pretty severe recession,” said independent market strategist Doug Peta. “With each week’s new round of data, it appears that the severity of recession and suddenness with which it’s hit the United States and other economies are more than anyone had bargained for.”

The Dow dropped 337.94 points, or 3.8%, to 8,497.31. It lost 5% for the week.

The Standard & Poor’s 500 index fell 38 points, or 4.2%, to 873.29. It dropped 6.2% for the week.

The Nasdaq composite index skidded 79.85 points, or 5%, to 1,516.85. It gave up 7.9% for the week.

Economically sensitive stocks -- including materials, technology and consumer discretionary shares -- led Friday’s decline.

Intel fell 7.7%, Apple slid 6.4% and Motorola skidded 11% on fears that companies and consumers were scaling back tech buying.

Energy shares fell as the price of crude oil backtracked $1.20 a barrel to $57.04. Chevron lost 3.2%, while Exxon Mobil gave up 2.3%.

Financial stocks were hit as investors continued to show their displeasure with the Treasury Department’s decision to shelve its planned purchases of troubled assets from banks.

Morgan Stanley slumped 8.9%, E-Trade Financial tumbled 9.4% and JPMorgan Chase sank 7.3%.

The sell-off ended the latest in a series of one-hit wonders for the stock market -- a tantalizing upward burst that is followed by a seemingly inevitable drop the next day.

Stocks receded Friday morning after the Commerce Department said retail sales slumped 2.8% in October during the height of the turmoil on Wall Street.

It was the biggest monthly plunge since the department began compiling retail sales data in 1992, and was worse than the 2.4% expected drop.

Combined with a battery of warnings from retailers of weaker-than-expected earnings, the report sharpened fears about the holiday-shopping season, whose prospects seem to be deteriorating daily.

Sears Holdings dropped 14%, Macy’s fell 10% and Lowe’s shed 7.6%. Abercrombie & Fitch plunged 21%.

The market kept sliding despite hints by Federal Reserve Chairman Ben S. Bernanke that another interest-rate cut could be in the offing.

Late in the session, after Treasury Secretary Henry M. Paulson predicted in an interview on CNBC that the government bailout effort would succeed, stocks surged, pushing into positive territory, until the rally was snuffed out by the wave of late selling.

Analysts say such gyrations are symptomatic of bear markets as investors scramble to catch -- or get out of the way of -- quick moves.

The swings also are driven in part by conflicting expectations about how long the economic maelstrom will last, said Ed Yardeni, president of Yardeni Research in Great Neck, N.Y.

“The market right now is trying to figure out whether this recession has any chance of ending by the middle of next year,” Yardeni said. “If it does, we’re making lows here. If investors think we’re just going to be depressed through the end of 2009, then we could go lower.”