Market's turbulent week ends in sharp downturn


POSTED: Saturday, November 15, 2008

NEW YORK » Wall Street ended a turbulent week with another astonishing show of volatility yesterday, with stocks plunging, recovering and then plunging again as investors absorbed another wave of downbeat economic news. The Dow Jones industrials fell almost 340 points and the major indexes all fell sharply for the second straight week.

Hedge fund selling in advance of a deadline today contributed to the market's gyrations. But there was plenty of discouraging news for investors to focus on, including comments from Federal Reserve Chairman Ben Bernanke that the markets remain under “;severe strain”; and a sobering report on October retail sales.

The Fed is scheduled to meet Dec. 16 at its last regularly scheduled meeting this year..

The U.S. Commerce Department reported that retail sales plunged by the largest amount on record in October as consumers cut back on spending in the wake of the financial crisis. Retail sales fell by 2.8 percent last month, surpassing the old mark of a 2.65 percent drop in November 2001 in the wake of the terrorist attacks that year.

The market got more disappointing consumer news from retailers Abercrombie & Fitch Co. and JCPenney Co. Both warned that profits will come in below Wall Street's already lowered projections as retailers head into a holiday shopping season that could be among the slowest on record.

The market drew some brief comfort in the afternoon from comments from Treasury Secretary Henry Paulson, who told CNBC that capital injections in the banking sector will help stimulate lending. He also defended the decision to not buy toxic assets from banks, saying that it would not work as quickly; the move helped send stocks falling earlier this week.

The Dow fell 337.93, or 3.82 percent, to 8,497.31, at its lows of the day. The Dow fell more than 300 in early trading, recovered to a slim advance and then turned sharply lower at the end of the day as hedge funds cashed out. Fund investors had a deadline today for withdrawing their money, which forced the funds in turn to sell stocks.

The Standard & Poor's 500 index fell 38.00, or 4.17 percent, to 873.29, and the Nasdaq stumbled 79.85, or 5.00 percent, to 1,516.85.

The Russell 2000 index of smaller companies fell 34.71, or 7.07 percent, to 456.52.

Declining issues outpaced advancers by about 4 to 1 on the New York Stock Exchange, where consolidated volume came to 5.73 billion shares, compared with 7.67 billion on Thursday.

The dollar rose against other major currencies. Gold prices also rose.

The Russell 2000 index finished the week down 31.73, or 5.90 percent, at 505.79.

For the week, the Dow lost 4.99 percent, the S&P fell 6.20 percent and the Nasdaq tumbled 7.92 percent.

The three-month Treasury bill's yield fell to 0.14 percent from 0.20 percent late Thursday, and the yield on the benchmark 10-year Treasury note fell to 3.72 percent from 3.85 percent late Thursday. Lower yields indicate higher demand.

Meanwhile, the price of a barrel of light, sweet crude fell $1.20 to settle at $57.04 a barrel on the New York Mercantile Exchange.

Shares of major retailers fell as the string of disappointing earnings and outlooks continued. JCPenney lost $2.01, or 10.4 percent, to $17.27. Abercrombie & Fitch tumbled $4.65, or 20.7 percent, to a 52-week low of $17.79.