Twin worries send stocks down
NEW YORK – The Dow Jones industrial average had its first triple-digit drop of 2010 as mounting losses from loans at JPMorgan Chase & Co. and a disappointing consumer sentiment reading sent investors rushing from stocks.
Financial stocks led the market lower Friday, pulling major stock indexes down about 1 percent from 15-month highs. The Dow lost almost 101 points, its steepest drop since Dec. 31. Interest rates fell in the bond markets as investors bought Treasurys in search of safety.
Commodity prices slumped as the dollar turned higher, and a disappointing report on consumer sentiment also weighed on the market. The preliminary Reuters/University of Michigan consumer sentiment index for January rose to 72.8 from 72.5 in late December but came in weaker than economists had forecast.
The news from JPMorgan brought concerns about profits at other big banks, many of which post results next week. Banks have been saying since the financial crisis exploded in fall 2008 that mortgages resetting at higher rates and job losses would push more loans into default. The latest comments gave investors a fresh reminder that the economy still needs more time to heal.
After a 10-month run in the market that has been all but unbroken, some investors think stocks are running low on gas. Light trading volume since November indicates there is little conviction behind the market’s recent ascent. The Dow on Thursday closed above 10,700 for the first time since October 2008 and has climbed 62.1 percent since March, though it’s still down 25.1 percent from its peak in October 2007.
The market will get additional signals about the economy next week as many more companies report earnings. U.S. markets are closed on Monday for Martin Luther King Jr. Day.
For the week, the Dow Jones U.S. Total Stock Market Index – which measures nearly all U.S.-based companies – ended at 11,604.82, down 101.96, or 0.9 percent.
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