Stocks take worst bruising of year

NEW YORK – Stocks just had their worst week of the new year.

The Standard & Poor’s 500 ended a shortened trading week down 0.7 percent. Though modest compared to the scary drops last year, it’s the worst since the week ended Dec. 16, 2011.

Trading was closed for Good Friday.

Investors sold stocks Thursday on fears that Spain may have trouble paying back its debt after a key interest rate on Spanish government bonds rose to the highest point since November.

“The firewall that Europe has established is in no way adequate to handle a Spanish default,” said Jim Russell, chief equity strategist at U.S. Bank Wealth Management. “We’re hopeful that (its debt) will be manageable, but we’re not sure.”

The S&P 500 fell 0.88 point Thursday to close at 1,398.08. The Dow Jones industrial average fell 14.61 points to 13,060.14. The Nasdaq composite rose 12.41 points to 3,080.50.

The Dow and S&P fell right after the opening bell, then turned up briefly before dropping again.

The selling appeared to be tempered by a Labor Department report early Thursday that the number of people seeking jobless benefits fell to a four-year low.

The selling came after the Dow had dropped nearly 125 points a day earlier, its worst decline in a month. That was triggered by minutes from the Federal Reserve’s last meeting suggesting that the central bank didn’t plan any more steps to push interest rates lower.

“The sell-off yesterday was a little overdone, a reaction to how far we came for the quarter, and how fast,” said Brian Lazorishak, a portfolio manager at Chase Investment Counsel. For the first three months of the year, the three major indexes were up 8 percent or more, the best start to a year since the great bull market of the 1990s.

Spain has become the latest point of concern in Europe’s debt crisis. Investors are concerned over the ability of the country’s government to push through cost-cutting programs at a time when its economy appears to be heading for another recession.