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Associated Press
Wall Street Suffers Worst Single Day in Nearly Two Years As Dow Industrials Fall 191 Points
NEW YORK (AP) -- Wall Street suffered its worst single day in
nearly two years Friday, with the Dow Jones industrial average falling 191
points for its third straight triple-digit loss. Deepening concerns over
economic growth and higher prices led to the worst week of trading since August.
The selloff was bolstered by lower-than-expected profits from IBM Corp., which led to fears that technology spending would be substantially worse than expected this year. Strong earnings from General Electric Co. and Citigroup Inc. were overlooked, but analysts said earnings would nonetheless be a key factor in overcoming the recent slump. "Earnings are really the only hope for this market," said Brian Pears, head equity trader at Victory Capital Management in Cleveland. "If, on the whole, earnings can go up, then we might be able to overcome oil and inflation and all the other things." According to preliminary calculations, the Dow fell 191.24, or 1.86 percent, to 10,087.51, after falling 125 points Thursday and 104 points Wednesday. It was the Dow's lowest close since Nov. 2. Broader stock indicators also lost considerable ground. The Nasdaq composite index dropped 38.56, or 1.98 percent, to 1,908.15 for its worst showing since Oct. 25. The Standard & Poor's 500 index was down 19.43, or 1.67 percent, at 1,142.62, its lowest level since Nov. 3. All three indexes set five-month lows for the second straight session, prompted by disappointing earnings in the tech sector and questions about slowing economic growth. With Friday's losses, it was the first time the Dow lost 100 points three sessions in a row since late January 2003. For the week, the Dow lost 3.57 percent, the S&P 500 was down 3.27 percent, and the Nasdaq tumbled 4.56 percent. The major indexes are also at their lowest points of 2005, with the Nasdaq down 12.29 percent, the Dow falling 6.45 percent and the S&P having lost 5.72 percent. Bond investors were pleased with Friday's results, however, as the bond market continued to rally. The yield on the 10-year Treasury note fell to 4.24 percent from 4.34 percent late Thursday. The dollar was mixed against other major currencies, while gold prices moved higher. Crude oil prices were lower and continued a two-week downtrend, with a barrel of light crude settling at $50.49, down 64 cents, on the New York Mercantile Exchange. The recent drop in crude futures notwithstanding, higher oil prices are to blame for the jump in import prices, the Labor Department said. Import costs rose 1.8 percent in March, but even without oil, prices rose 0.3 percent, more than the 0.2 percent rise economists had expected. "There's a lot of evidence that when we have oil averaging $53 or $54 per barrel, that's inflationary, and we got a whiff of that today in the import prices," said Peter Cardillo, chief strategist and senior vice president with S.W. Bach & Co. "It doesn't help that we're starting to see the economy enter a slowing mode heading into the second quarter here." Investors looking at the Fed's industrial output report also questioned whether higher energy and materials costs were affecting manufacturing growth as well. Overall industrial production rose 0.3 percent in March, up from 0.2 percent in February, but the increase came only from utility production due to a colder-than-average month, and manufacturing and other industrial sectors showed losses for the first time in six months. IBM said an inability to close deals before the end of the quarter, combined with higher pension costs, dragged on its earnings. The technology company, which missed Wall Street forecasts by 6 cents per share, hinted at a major restructuring this year. IBM tumbled $6.94, or 8.3 percent to $76.60, and was the biggest loser on the Dow. General Electric rose 25 cents to $35.75 after the industrial and media conglomerate reported a 25 percent jump in first-quarter profits, with nine of the company's 11 disparate divisions reporting double-digit growth. The company's forecasts for the second quarter and full year were in line with Wall Street's estimates.
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