Losses continue in volatile week
NEW YORK » Wall Street ended a depressing week with another big loss yesterday, with the Dow Jones industrials falling more than 100 points amid ever-escalating worries about high oil prices and fallout from the credit crisis. The major indexes are all down more than 3 percent for the week.
The Dow has fallen nearly 460 points in the last two sessions and reached its lowest point since September 2006.
Investors again contended yesterday with a seemingly relentless stream of troubling news about the financial sector. Moody's Investors Service said it is reviewing investment bank Morgan Stanley for a possible downgrade. There were also more reports that Merrill Lynch & Co. might have to write off nearly $6 billion of risky mortgage-backed debt.
In addition to anxiety about the financials, the market watched oil's march higher - the price of crude rose to a new record of $142.99 a barrel on the New York Mercantile Exchange.
"People are trading with a lot of emotion," said Alexander Paris, an economist and market analyst for Chicago-based Barrington Research. "I think the market is trying to make a bottom, but the question is will it hold there or just crash through. It feels just like the top of the technology bubble in 2000, you know there's something wrong but it is hard to time it."
Investors got little solace from economic data released yesterday. The U.S. Commerce Department said spending rose 0.8 percent in May, as taxpayers started receiving their stimulus checks. The increase was higher than the 0.7 percent economists predicted. The report also said personal incomes surged 1.9 percent - significantly more than anticipated. After taxes, incomes surged 5.7 percent, the largest amount in 33 years.
The Dow fell 106.91, or 0.93 percent, to 11,346.51, compounding Thursday's 358-point skid. The blue chip index is down 19.9 percent from its record high close of 14,164.53 in October, and is on the verge of the 20 percent pullback that is considered the threshold for a bear market.
Broader stock indicators also closed lower. The Standard & Poor's 500 index fell 4.77, or 0.37 percent, to 1,278.38. The S&P, the index most closely watched by market professionals, is down 18.3 percent from its October high.
The Nasdaq composite index fell 5.74, or 0.25 percent, to 2,315.63.
For the week, the Dow gave up 4.19 percent, the S&P shed 3 percent and the Nasdaq fell 3.76 percent. With one trading day left in the second quarter, the Dow is down 7.47 percent, the S&P 500 is off 3.35 percent and the Nasdaq is up 1.60 percent.
Declining issues outnumbered advancers by about 3 to 2 yesterday on the New York Stock Exchange, where consolidated volume came to 5.74 billion shares, up from 5.11 billion on Thursday.
Bond prices moved higher. The yield on the benchmark 10-year Treasury note, which tends to move opposite its price, was at 3.97 percent, down from 4.03 percent late Thursday. The dollar was lower against other major currencies, while gold prices rose.
The Russell 2000 index of smaller companies fell 0.28, or 0.04 percent, to 698.14.
In other economic news, the University of Michigan's June index of consumer sentiment came in at 56.4, a bit lower than its reading in May and slightly below the average analyst estimate.