The Wall Street Journal-20080119-Stocks Try to Climb- Then Stumble 59-91 Points
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Stocks Try to Climb, Then Stumble 59.91 Points
Stocks briefly found a handhold as they tried to avoid yet another decline -- and then lost their grip again.
The Dow Jones Industrial Average fell 59.91 points, or 0.5%, to close at 12099.3, its lowest close since March 13. The industrials are off 8.8% so far this year -- their worst 13-session start to a year ever.
The blue-chip average ended the week down 4% and less than 800 points away from a 20% decline from its Oct. 9 record close, the technical definition of a bear market.
Stocks surged early, shaking off some of the brutal declines of recent days, partly on hopes for aggressive economic stimulus from the government and Federal Reserve. But as details emerged from President Bush's speech about the need for economic stimulus, the Dow fell into the red and spent most of the rest of the day there.
Some investors apparently hoped for more details from Mr. Bush, and there was also chatter that the Federal Reserve might make a surprise interest-rate cut, which didn't materialize.
Helping drag the Dow lower were AT&T, which fell 3.2%, and Verizon Communications, which dropped 4.4%. The telecom stocks, among the Dow's best performers in 2007, were hit hard by Sprint Nextel's report that it is losing wireless customers and will lay off 4,000 employees. Sprint shares plunged nearly 25%.
Strong earnings reports from General Electric and International Business Machines helped mitigate the losses. Those stocks were among the Dow's best performers all day, rising 3.3% and 2.3%, respectively.
The Dow swung from up more than 180 points in early trading to down nearly 140 points in the afternoon. Options expirations contributed to the wild ride, but emotions played a role, too.
"There's still a lot of fear," said Bill Frejlich, a broker with Fox Investments, a division of MF Global. "The market is looking for reasons to sell off."
With the possibility of recession weighing heavily on the market, investor sentiment could remain fragile until either the Fed cuts rates aggressively or clear signs emerge that the economy will dodge a downturn.
"The market is gripping onto any sort of hope," said Joseph Saluzzi, co-head of equity trading at Themis Trading LLC. "But hope doesn't extend rallies -- real news does."
The Nasdaq Composite Index fell 0.3%, or 6.88 points, to 2340.02, shedding 4.1% this week. The technology-heavy index is down 18.2% since its multiyear high in October and off 12% this year.
The Standard & Poor's 500-stock index fell 0.6%, or 8.06 points, to close at 1325.19, ending the week down 5.4%, its largest one-week percentage drop since July 19, 2002. It is down about 15% from its October high and off 9.8% so far in 2008.
Financial stocks continued their miserable performance amid worries about troubled bond insurers MBIA and Ambac. MBIA fell 7.3% after sliding 31% Thursday and Ambac was off 0.6% after a 52% drop on Thursday. Dow components Citigroup and American International Group fell about 2% and 4%, respectively.
In one hopeful sign, industries tied to global economic strength, such as basic materials and energy, rose as defensive sectors such as health care and consumer staples fell, reversing recent trends. If economic worries persist, however, that reversal may not last long.
Two indexes already in bear-market territory took different paths -- the Russell 2000 small-stock index fell 1.1% and is now down 21.3% from its peak in July 2007. The Dow Jones Transportation Average rose about 1%, but is still down 23.3% from its peak.
Outside the U.S., stocks declined in dollar terms. The Dow Jones World Stock Index, excluding U.S. stocks, fell 0.66%, or 1.64 points, to 246.96.
In major U.S. market action:
Stocks fell. Total trading volume for stocks listed on the New York Stock Exchange was 5.9 billion shares, as 1,185 stocks rose and 2,098 fell.
Bond prices were flat. The 10-year Treasury note was unchanged, leaving its yield at 3.64%.
The dollar was mixed. It traded unchanged at 106.68 yen, while the euro fell against the dollar to $1.4617, from $1.4657.
