Economic worries pummel stocks
NEW YORK – Grim signals about consumer spending ripped through the markets Friday, sending stocks tumbling as investors raced for safe havens.
The Standard & Poor’s 500 index and the Nasdaq composite index ended with losses for October, breaking a streak of seven months of gains. The Dow Jones industrial average tumbled 250 points, erasing a 200-point gain Thursday and ending the month flat.
Drops in key barometers of the health of consumers – what they’re spending, what they’re earning and how they’re feeling – fanned worries that an economic recovery celebrated by the market only a day earlier won’t last.
The huge reversal in market sentiment from the day before reflected how desperate stock investors are to reach conclusions about how the economy is doing, and how quickly they are willing to abandon those convictions.
The about-face from Thursday to Friday in the S&P 500 index, the most widely used indicator by investing professionals and the benchmark for many mutual funds, was the sharpest swing for the index since February.
“I think you have a market that is ultimately looking for its direction,” said Bob Froehlich, senior managing director at Hartford Financial Services. “We really are at the inflection point. You tend to have an overreaction to both extremes.”
The heaviest selling came in areas that have been stalwarts of the market’s powerful climb since March: financials, technology, energy and industrials. The safest areas, like health care, consumer staples and utilities, fared somewhat better.
The Dow fell 249.85, or 2.5 percent – its biggest one-day percentage drop since July 2.
The broader S&P 500 index fell 29.92, or 2.8 percent; the Nasdaq dropped 52.44, or 2.5 percent.
© Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.