Posted on: Saturday, April 16, 2005
Frightful Friday on Wall Street
| • | Gyrations stump experts |
By Michael J. Martinez
Associated Press
NEW YORK — Wall Street suffered its worst single day in nearly two years yesterday, with the Dow Jones industrial average falling 191 points for its third straight triple-digit loss. Deepening concerns over economic growth and higher prices led to the worst week of trading since August.
Mark Lennihan • Associated Press The selloff was bolstered by lower-than-expected profits from IBM Corp., which led to fears that technology spending would be substantially worse than expected this year. Strong earnings from General Electric Co. and Citigroup Inc. were overlooked, but analysts said earnings would nonetheless be a key factor in overcoming the recent slump.
"Earnings are really the only hope for this market," said Brian Pears, head equity trader at
Victory Capital Management in Cleveland. "If, on the whole, earnings can go up, then we might be able to overcome oil and inflation and all the other things."
The Dow fell 191.24, or 1.86 percent, to 10,087.51, after falling 125 points Thursday and 104 points Wednesday. It was the Dow's lowest close since Nov. 2.
Broader stock indicators lost considerable ground. The Nasdaq composite index fell 38.56, or 1.98 percent, to 1,908.15 for its worst showing since Oct. 25.
The Standard & Poor's 500 was down 19.43, or 1.67 percent, at 1,142.62, its lowest since Nov. 3.
All three indexes set five-month lows for the second straight session. With yesterday's losses, it was the first time the Dow lost 100 points three sessions in a row since late January 2003.
For the week, the Dow lost 3.57 percent, the S&P 500 was down 3.27 percent, and the Nasdaq tumbled 4.56 percent. The major indexes are also at their lowest points of 2005, with the Nasdaq down 12.29 percent, the Dow falling 6.45 percent and the S&P having lost 5.72 percent.
Bond investors were pleased with yesterday's results, however, as the bond market continued to rally. The yield on the 10-year Treasury note fell to 4.24 percent from 4.34 percent late Thursday. The dollar was mixed against other major currencies, and gold prices moved higher.
Crude oil prices were lower and continued a two-week downtrend, with a barrel of light crude settling at $50.49, down 64 cents, on the New York Mercantile Exchange.
The recent drop in crude futures notwithstanding, higher oil prices are to blame for the jump in import prices, the Labor Department said. Import costs rose 1.8 percent in March, but even without oil, prices rose 0.3 percent, beyond the 0.2 percent that economists expected.
"There's a lot of evidence that when we have oil averaging $53 or $54 per barrel, that's inflationary, and we got a whiff of that today in the import prices," said Peter Cardillo, chief strategist and senior vice president with S.W. Bach & Co. "It doesn't help that we're starting to see the economy enter a slowing mode heading into the second quarter here."
Declining issues outnumbered advancers by more than 4-to-1 yesterday on the New York Stock Exchange, where consolidated volume came to 2.75 billion shares, compared with 2.38 billion on Thursday.
The Russell 2000 was down 11.16, or 1.89 percent, at 580.78. It lost 4.91 percent this week and is down 10.86 percent for the year.
An already uneasy market began the biggest one-day selloff since May 19, 2003, after the Federal Reserve reported drops in manufacturing and other industrial production, and a Labor Department report showed higher oil costs driving up import prices.
The Nasdaq composite index fell 38.56 yesterday, or 1.98 percent, to 1,908.15 — its worst showing since Oct. 25. For the week, the Nasdaq lost 4.56 percent, the Dow Jones industrial average fell 3.57 percent and the Standard & Poor's 500 index was down 3.27 percent.
