Wall Street ended with relatively modest losses Friday after a violent sell off in global markets and wild swings for US indexes. The Dow was off 1.49 percent while the S&P 500 ended its worst week ever, down 1.18 percent.
NEW YORK - The Dow and the S&P 500 dropped for an eighth session on Friday, as a dramatic late-day comeback stalled out to cap the worst week ever for the S&P amid more anxiety about the condition of credit markets and the threat of a global recession.
Even in a market whose recent hallmark has been volatility, Friday's action was exceptional. The Dow lurched back and forth in a 1,000-point range and a late pop in technology shares helped the Nasdaq eke out its first gain of the month. Volume on the New York Stock Exchange was more than double the average of 2008 so far.
But bets that finance chiefs of the world's major economies will take action over the weekend were not enough to keep the Dow and the S&P 500 out of the red. Finance leaders from the world's rich nations pledged a coordinated response to the credit crisis, but stopped short of backing a British plan to guarantee lending between banks.
Shares of Morgan Stanley and Goldman Sachs tumbled after credit ratings service Moody's said it might cut their ratings, reviving concerns about the viability of their banking models.
Energy companies weighed on the market as oil prices fell 10 percent to a 13-month low below $78 a barrel on fear a faltering global economy will cut demand for crude.
"A lot of people look at this crazy selling and believe we are forming a bottom, particularly when you have all this despondency, capitulation and utter despair. But then ... people are still scared and selling," said Brian Gendreau, an investment strategist in
The Dow Jones industrial average fell 128.00 points, or 1.49 percent, to 8,451.19, while the Standard & Poor's 500 Index dropped 10.70 points, or 1.18 percent, to 899.22. The Nasdaq Composite Index, meanwhile, edged up 4.39 points, or 0.27 percent, to 1,649.51.
Traders cited margin calls and forced liquidations as a key contributor to the week's sell-off in stocks.
"People are not selling for valuation reasons. They are not selling because inflation or interest rates are headed higher. They are selling just to raise capital," said Owen Fitzpatrick, head of the
For the week, both the Dow and the S&P 500 fell 18 percent, while the Nasdaq slid 15.3 percent.
Faced with the threat of a global recession and panicky financial markets, Group of Seven members acknowledged that they could no longer afford a country-by-country, case-by-case approach to crisis management after 14 months of turmoil.
Recapitalizing banks was a top priority as the finance ministers of the
The G7 finance ministers are expected to issue a communique summing up their views sometime after 6 p.m., but heading into the afternoon meeting there was little consensus on what they might say.
Morgan Stanley shares dropped 22.2 percent to $9.68, while Goldman Sachs shares fell 12.4 percent to $88.80, even as the S&P financial sub-index rose 7 percent.
Shares of Exxon Mobil were a top drag on the Dow, sliding 8.3 percent to $62.36, while shares of Chevron plummeted 9.6 percent to $57.83. The S&P energy index fell 8.1 percent.
A pullback in the cost for banks to borrow overnight dollars from, or among, each other tempered some market anxiety. But the cost to borrow dollars over three months shot higher again, indicating credit markets effectively remain jammed.
Trading was heavy on the New York Stock Exchange, with about 2.95 billion shares changing hands, sharply above last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 4.17 billion shares traded, far above last year's daily average of 2.17 billion.
Declining stocks outnumbered advancing ones on the NYSE by 2 to 1, while on the Nasdaq, they were roughly equal.
Date created : 2008-10-10