NEW YORK, June 28 — Wall Street ended a depressing week with another big loss yesterday, with the Dow Jones industrials falling more than 100 points amid ever-escalating worries about high oil prices and fallout from the credit crisis. The major indexes are all down more than 3 per cent for the week.
The Dow has fallen nearly 460 points in the last two sessions and reached its lowest point since September 2006.
Investors again contended yesterday with a seemingly relentless stream of troubling news about the financial sector. Moody’s Investors Service said it is reviewing investment bank Morgan Stanley for a possible downgrade. There were also more reports that Merrill Lynch & Co might have to write off nearly US$6 billion of risky mortgage-backed debt.
In addition to anxiety about the financials, the market watched oil’s march higher — the price of crude rose to a new record of US$142.99 a barrel on the New York Mercantile Exchange. Wall Street remains concerned that higher commodity prices will slam consumers with not only elevated costs for energy and food, but also for other goods if cash-strapped companies decide to pass along the rising costs.
“People are trading with a lot of emotion,” said Alexander Paris, an economist and market analyst for Chicago-based Barrington Research. “I think the market is trying to make a bottom, but the question is will it hold there or just crash through. It feels just like the top of the technology bubble in 2000, you know there’s something wrong but it is hard to time it.”
The Dow fell 106.91, or 0.93 per cent, to 11,346.51, compounding Thursday’s 358-point skid. The blue chip index is down 19.9 per cent from its record high close of 14,164.53 in October, and is on the verge of the 20 per cent pullback that is considered the threshold for a bear market.
Broader stock indicators also closed lower. The Standard & Poor’s 500 index fell 4.77, or 0.37 perc ent, to 1,278.38. The S&P, the index most closely watched by market professionals, is down 18.3 per cent from its October high.
The Nasdaq composite index fell 5.74, or 0.25 per cent, to 2,315.63.
The market was pounded this week not only by a resurgence of bad news about the financial sector and US$140 oil, but by harbingers of problems to come in other parts of the economy. Poor outlooks for high-tech companies and the automotive sector reminded Wall Street that the troubles have the potential to become widespread.
There is also likely fear on the Street about upcoming second-quarter earnings reports and companies outlooks for the rest of the year. Oracle Corp’s warning of difficult times ahead contributed to Thursday’s huge drop.
For the week, the Dow gave up 4.19 per cent, the S&P shed 3 per cent and the Nasdaq fell 3.76 per cent. With one trading day left in the second quarter, the Dow is down 7.47 per cent, the S&P 500 is off 3.35 per cent and the Nasdaq is up 1.60 per cent.
Year-to-date statistics show how badly the market has suffered from the credit crisis and the impact of soaring oil: The Dow is down 14.46 per cent, the S&P 500 is down 12.94 per cent and the Nasdaq is down 12.69 per cent.
Even if the economic numbers coming out soon — including the US government’s June employment report, to be issued on Thursday — look better, the market likely won’t be reassured, because the impact of higher oil is still not known.
Overseas, Japan’s Nikkei stock average fell 2.01 per cent after Wall Street’s tumble on Thursday. Britain’s FTSE 100 rose 0.21 per cent, Germany’s DAX index fell 0.58 per cent, and France’s CAC-40 lost 0.65 per cent. — AP