Anxiety rules Wall Street
Stocks fall again as traders worry about another recession
NEW YORK – A growing belief that the U.S. economy is headed toward recession gave the stock market its fourth straight week of losses.
The anxiety in the market was obvious Friday as the major indexes went from modest gains early in the day to another sharp loss. The Dow Jones industrial average had its 10th move of more than 100 points this month.
“We just don’t know whether we’re going to have a recession,” said John Burke, head of Burke Financial Strategies.
There was little news to help investors determine their next moves. JPMorgan Chase & Co. joined other financial firms and cut its forecast for economic growth during the fourth quarter. It’s now predicting growth of 1 percent, down from an earlier forecast of 2.5 percent. That added to the recession fears.
Investors reacted to the news from late Thursday that Hewlett-Packard Co. was planning to exit most of its consumer businesses, including PCs. HP fell 20 percent to a six-year low as investors showed their misgivings about its plan to transform itself into a company that caters to corporations.
The market rose in early trading, but some investors did not want to take the chance of holding stocks if bad news came out of Europe over the weekend. So they began selling during the afternoon. European investors were also cautious – banking stocks fell near two-and-a-half-year lows, dragged down by rumors about banks’ potential losses on bonds issued by heavily-indebted governments.
“These things usually break out over the weekend and then you have a mad dash Monday to react to them,” said Mike McGervey, the head of McGervey Wealth Management.
The drop late in the day recalled the 2008 financial crisis. Then, many investors stepped up their selling in the afternoon out of fears about news that might break overnight. Or on weekends – Lehman Brothers failed on Sunday, Sept. 15. The government took over mortgage companies Fannie Mae and Freddie Mac the previous weekend.
The Dow lost 172.93, or 1.6 percent, and closed at 10,817.65. It was down 4 percent for the week. Since July 21, right before the market began its plunge, the Dow is down 15 percent.
Companies that rely on an expanding economy for revenues fell. Caterpillar Inc., International Business Machines and Alcoa Inc. each fell more than 2 percent.