Wall Street Slides Into Weekend
Stocks gave up some ground Friday as interest rates rose and the latest computer-industry earnings failed to impress. But an exhausted market eased into the weekend with little of the drama that started Wall Street’s busiest week ever.
The Dow Jones industrial average fell 37.36 to 5,426.82, a loss of just 83 points for a week that started with an ominous slide of nearly 330 points, or 6 percent, before a stunning rebound Tuesday afternoon.
Broader measures also slipped Friday, with the tattered Nasdaq market showing the worst losses after two strong sessions, but it was the third straight day of welcome calm.
“Everybody is relieved that Alan Greenspan isn’t going to do anything right away,” said Tracy Herrick, chief investment strategist at Jefferies & Co. in San Francisco. He referred to the Federal Reserve chairman’s indication Thursday that inflation isn’t yet enough of a threat to warrant an economy-slowing interest rate hike. “But it’s been very quiet. After a very rocky week, I think many people have left.”
The technology-laden Nasdaq composite index fell 12.14 to 1,097.68, but finished the week with a loss of just 6 points. At the lowpoint of this week’s steep, but brief selloff, the Nasdaq was off 95 points, or more than 8.5 percent.
Analysts attributed much of Friday’s weakness to the bond market, where long-term interest rates edged higher after easing below a psychologically important barrier a day earlier.
Bonds had rallied Thursday as long-term bond yields - a key determinant of corporate and consumer borrowing costs - fell below 7 percent for the first time since the markets started to unravel two weeks ago on fears of a resurgence in inflation, which makes fixed-income investments like bonds less valuable.
On Friday, bond traders took some profits on Thursday’s rally, and the yield on the 30-year Treasury rose to 6.98 percent. Higher interest rates can hurt stocks by raising corporate borrowing costs and slowing consumer spending.
Declining issues outnumbered advancers by a 7-to-5 margin on the New York Stock Exchange, where volume totaled 402.25 million shares as of 4 p.m., down from 469.65 million in the previous session, but enough to make it the busiest week in NYSE history, with almost 2.5 billion shares changing hands.
The NYSE’s composite index fell 2.19 to 342.91, the Standard & Poor’s 500-stock index fell 4.83 to 638.73, and the American Stock Exchange’s market value index fell 2.87 to 548.76.
Several leading technology issues slid sharply in the aftermath of their profit reports, released after the markets closed Thursday.
“People are having sobering second thoughts about how high price-to-earnings ratios can go and not be of concern,” said Henry Herrmann, chief investment officer at Waddell & Reed.
Overseas, Tokyo’s Nikkei stock average fell 0.4 percent, Frankfurt’s DAX index rose 0.6 percent, and London’s FT-SE 100 rose 0.5 percent.