Market continues volatile pattern
NEW YORK – Buyers returned to Wall Street on Friday after two days of heavy losses, mindful of the economy’s growing problems but attracted by stocks’ lower prices. Analysts said the advance was to be expected as Wall Street experiences a rocky recovery from October’s devastating selling.
The major indexes jumped more than 2 percent, including the Dow Jones industrial average, which rose nearly 250 points in light trading. For the week, the Dow and broader benchmarks like the Standard & Poor’s 500 index lost about 4 percent after surging 10 percent or more last week.
Friday’s trading was a mini-version of the market’s performance over the past two weeks, with investors upbeat, then realizing there was little basis in reality for their resurgent confidence, then changing their minds again.
The market briefly came off its highest levels of the session after President-elect Obama reiterated at a news conference that there is a great deal of hard work to be done to restore the economy to health. Investors had optimistically sent prices higher, only to temporarily pull back when Obama underscored what they already know: that the economy’s problems won’t be easily solved.
The market is following the pattern of volatility that analysts warned would prevail for some time to come.
Obama’s election was preceded by a big rally, during which the benchmark Standard & Poor’s 500 index surged 18.3 percent in six sessions up through Tuesday. This was followed by a two-day loss of about 10 percent in the major indexes, including a 929-point drop in the Dow, as investors turned their focus once more to the economy’s woes.
Despite the gains Friday, investors have not lost sight of the potential for a deep and protracted recession. Obama will inherit an economy marred by a housing collapse, mounting unemployment, hard-to-get credit and financial market upheaval when he assumes office early next year.
The Dow Jones industrial average ended the week down 381.20, or 4.09 percent, at 8,943.81. The Standard & Poor’s 500 index finished down 37.76, or 3.9 percent, at 930.99. The Nasdaq composite index ended the week down 73.55, or 4.27 percent, at 1,647.40.
The Russell 2000 index finished the week down 31.73, or 5.90 percent, at 505.79.
The Dow Jones Wilshire 5000 Composite Index – a free-float weighted index that measures 5,000 U.S. based companies – ended at 9,358.30, down 410.34 points, or 4.20 percent, for the week. A year ago, the index was at 14,921.71.
Paper losses for the week in U.S. stocks came to $500 billion, according to the Dow Jones Wilshire 5000 Composite Index, which reflects nearly all stocks traded in America.