The Wall Street Journal-20080216-Dow Comes Out on Top Despite a Tough End to Week

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Dow Comes Out on Top Despite a Tough End to Week

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After beginning the week with a bounce, stocks ended it with a thud, dragged down by renewed worries about the economy and credit markets.

Stocks fought to rebound from Thursday's 175-point decline but failed, spending most of Friday in the red after a raft of troubling economic news. The University of Michigan said its measure of consumer sentiment plunged to the lowest level in 16 years. The New York Federal Reserve's index of regional manufacturing activity sank into negative territory, its biggest one-month drop on record.

Together with a tepid industrial-production reading from the Fed and a Labor Department report of surging import prices, the data sparked fresh fears that the economy's problems might be deep-rooted.

The Dow Jones Industrial Average fell 28.77 points, or 0.2%, to 12348.21, extending the selloff that began on Thursday. The blue-chip average is down 6.9% this year.

Still, the Dow gained 1.4% for the week after three straight days of gains through Wednesday on hopeful news about bond insurers and a better-than-expected retail-sales report.

The headlines turned negative at the end of the week and investors, dogged by uncertainty about the long-term outlook, followed suit.

"The market's extremely manic now, very data-dependent," said Todd Clark, director of trading at Nollenberger Capital Partners in San Francisco. "You get data points like [Friday's], and it doesn't make you want to take your wallet out of your hip pocket."

The approach of a three-day weekend, hedge-fund redemptions and stock-option expirations contributed to the volatility.

The Standard & Poor's 500-stock index rose 0.1%, or 1.13 points, to 1349.99 after spending most of the day in negative territory. The index ended the week 1.4% higher, but is still down 8.1% for the year.

The Nasdaq Composite Index fell 0.5%, or 10.74 points, to 2321.80, but ended the week with a 0.7% gain. The technology-focused index is down 12.5% for the year.

Nagging worries about the credit markets and financial sector continue to weigh on the market. Closely held bond insurer Financial Guaranty Insurance Co. told regulators it wanted to split into two companies. Shares of rivals MBIA and Ambac both fell about 3% Friday.

Citigroup was one of the biggest decliners among the Dow industrials, falling 1%.

Financial stocks have risen and fallen with the bond insurers' fortunes lately, fearful their woes will trigger billions more in credit-related bank write-downs. A UBS analyst warned Friday that the global financial sector might suffer an additional $200 billion in losses, on top of the roughly $150 billion in write-downs it has already taken. Still, the Dow Jones Wilshire U.S. Banks Index managed a small gain on the day.

Best Buy stoked fears about consumer spending, warning that its earnings will fall short of expectations because of weaker-than- expected January sales. Its shares fell 2.5%, and rival Circuit City Stores dropped nearly 5%. Shares of giant retailer Wal-Mart Stores dipped 1%

Economic concerns pushed Treasury prices mostly higher Friday, and the yield on the benchmark 10-year note sank to 3.78%. But yields were still higher for the week after a selloff sparked by mortgage-bond investors trying to balance their portfolios on Thursday.

Crude-oil prices ended the week 4.1% higher at $95.50, keeping alive nagging inflation worries. But gold prices fell 1.7% for the week to $902.80.