Stocks decline as dollar, bonds fall
Stocks faced a second day of steep losses Friday as the dollar weakened and bonds prices fell after data showing higher import prices stoked the market’s inflation worries. The major indexes declined sharply this week.
A rebound in prices for imported goods further rattled investors already worried about interest rates. Although import prices were flat excluding oil, that did little to soothe concerns about energy costs lifting prices elsewhere.
Plunging consumer confidence also reinforced beliefs that high gas prices at the pumps could choke consumer spending. Meanwhile, Wall Street weighed the importance of an unexpected decline in the trade deficit and cooling oil prices.
Friday’s decline in equity markets built on steep losses the previous day, when surging commodities prices compounded anxiety that the Federal Reserve could continue its two-year streak of interest rate hikes. And next week’s reports on wholesale and consumer prices could prove troublesome for the inflation picture.
The Dow lost 119.74, or 1.04 percent, to 11,380.99.
The Dow sank 142 points in Thursday’s session, its biggest single-day drop since falling 213 points on Jan. 19.
Broader stock indicators also retreated. The Standard & Poor’s 500 index fell 14.68, or 1.12 percent, to 1,291.24, and the Nasdaq composite index dropped 28.92, or 1.27 percent, to 2,243.78.
Bonds continued sliding, with the yield on the 10-year Treasury note rising to 5.2 percent from 5.16 percent late Thursday. The interest rate debate also weighed on the dollar, which fell further against the yen. Gold prices pulled back from fresh 25-year highs.
The major indexes closed substantially lower for the week following two days of frenzied selling, with troubling outlooks from Dell Inc. and Cisco Systems Inc. propelling the Nasdaq’s decline. For the week, the Dow skidded 1.7 percent and the S&P 500 slumped 2.61 percent; the Nasdaq plunged 4.22 percent, erasing much of its gains so far this year.
Volatile trading is expected to continue next week as investors draw clues about the economy and inflation from data on homebuilding and wholesale and consumer prices.
Declining issues led advancers by more than 4 to 1 on the New York Stock Exchange, where volume of 1.44 billion shares topped the 1.39 billion shares changing hands at the same point Thursday.
The Russell 2000 index of smaller companies declined 15.07, or 1.99 percent, to 742.40.
Overseas, Japan’s Nikkei stock average tumbled 1.54 percent. Britain’s FTSE 100 plunged 2.15 percent, Germany’s DAX index sank 2.29 percent and France’s CAC-40 was lower by 2.14 percent.