advertisement
Article Tools
| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.669170 |
| Euro to US Dollar | 1.511031 |
| Japanese Yen to US Dollar | 0.011542 |
| Canadian Dollar to US Dollar | 0.953743 |
A nasty sell-off in technology stocks battered stocks Friday for a third straight day, and the unease is likely to persist next week.
The Dow Jones industrials finished the day with a loss of nearly 224 points, or 1.7%, to 13,043.
Its three-day loss, which included a 360-point smackdown on Wednesday, was 618 points or 4.5%.
The Nasdaq Composite Index was off 68 points, or 2.5%, to 2,628, and the Standard & Poor's 500 Index fell 21 points, or 1.4%, to just under 1,454.
The market had been rebounding but then fell apart in the last hour of trading. Some last-minute selling was wariness about the market overall; some was continued profit-taking in tech stocks, which had had a big run-up since August.
For the week, the Dow lost more than 550 points, or 4.1%, its worst weekly loss in a month. Since the Dow peaked at 14,164.53 on Oct. 9, the index has fallen more than 1,100 points, or 7.9%.
The Nasdaq closed down 6.5% for the week, its biggest weekly loss since the week of April 22, 2002, when it fell 7.4%. The S&P 500 was down 3.7% on the week, its worst since a 3.9% loss the week of Oct. 9, although a major support level at 1,452 held, a possible good omen for next week.
For the year, the Dow is still up 4.7%. The Nasdaq is up 8.8%, and the S&P 500 is up 2.5%.
Next week is likely to see a continuation of the problems that have bedeviled the market for the past week: the impact of subprime-mortgage problems on the health of big financial companies, rising oil prices, the falling dollar and weakness in technology stocks.
It's hard to get a falling market to turn around without a big catalyst, and there wasn't one on Friday.
Financial stocks rebounded from losses early in the day. The S&P 500 Financial Sector, down as much as 2%, ended with a small gain. Those gains came despite more bad news from Wachovia (WB, news, msgs), Bank of America (BAC, news, msgs) and JPMorgan Chase (JPM, news, msgs). All three either announced big charges from the subprime crisis or said they could be taking more charges.
The selling began when Wachovia announced a $1.1 billion loss from subprime mortgages. But as financial stocks recovered, Wachovia moved up from a 5.5% loss to a 0.9% gain at $40.65.
But the bigger problem was that the stock market's hot money was running away from Big Technology:
- IBM Corp. (IBM, news, msgs) was down 5.5% to $100.25, the biggest loser among the 30 Dow stocks. IBM's loss was worth almost 48 points to the Dow's loss for the day. Big Blue was 12.5% on the week and is down nearly 14% for the month.
- Google (GOOG, news, msgs) was down 4.3% Friday to $663.97. It was down 6.7% on the week, although it's still up 44% on the year.
Stock Charts (Year)
IBM Corp.
Qualcomm
- Qualcomm (QCOM, news, msgs), whose chips power many cell phones, was down 4.2% to $38.10 Friday because of a disappointing outlook, hurt by legal costs and mounting competition.
- Research in Motion (RIMM, news, msgs), maker of the BlackBerry mobile device, was down 9.1% to $113.22 Friday. The stock was down 11% on the week. The stock is a victim of Cisco Systems' (CSCO, news, msgs) warning that it had seen "dramatic decreases" in orders from U.S. banks for its equipment, triggering concerns over growth.
- Cisco itself was down 3.5% Friday to $28.58 and down 12.1% on the week.
The dollar's fall against major currencies such as the euro since mid-September is a big reason why crude oil jumped from the mid-$70s to more than $98 by Wednesday morning. Crude closed up 86 cents a barrel on Friday to $96.32 a barrel.
Energy stocks generally were lower, but that didn't help transportation stocks. The Dow Jones Transportation Index ($TRAN) was off 2% to 4,604. Airline stocks were hardest hit. The Amex Airline Index ($XAL.X) was off 2.8% to 39.60 and sagged 11.8% on the week. JetBlue Airways (JBLU, news, msgs) was down 9% to $7.03 on the day and down 20% for the week. The discount carrier's shares are down more than 50% this year.
The dollar was down against the Japanese yen and British pound. The dollar is down more than 6% against the pound and yen and 10% against the euro this year. The U.S. Dollar Index was down 0.1% to 75.39. It's down 2.9% this quarter and 9.6% in 2007.
Only six of the 30 Dow stocks were higher on the day, along with 113 S&P 500 stocks and 15 of the 100 stocks in the Nasdaq-100 Index ($NDX.X). Apple's (AAPL, news, msgs) 5.75% loss to $165.37 contributed nearly 15 points to the index's 72-point loss to 2,034.30.
A small bit of good news: A support level holds
One interesting and, possibly, good thing occurred on Friday.Market technicians define a support level as a point that a stock or index hits on a number of occasions and doesn't continue falling. For the S&P 500 going into Friday, that level was 1,452. The index started to hit that level in late August and early September. And Friday offered a test of the strength of that support.
A bull would have to be delighted at the outcome. Four times during the session, the S&P 500 hit 1,452, including one at 3:55 p.m. just before the close.
All four times, the index bounced higher.
Does that mean the market could move higher? Possibly.
| Close for week | Wk. ago close | % chg. | YTD. chg. | |
|---|---|---|---|---|
| Dow Jones industrials | 13,042.74 | 13,595.10 | -4.06% | 4.65% |
| S&P 500 | 1,453.70 | 1,509.65 | -3.71% | 2.50% |
| Nasdaq Composite | 2,627.94 | 2,810.38 | -6.49% | 8.80% |
| Russell 2000 | 772.38 | 797.78 | -3.18% | -1.94% |
| Crude oil per barrel | $96.32 | $95.93 | 0.41% | 57.77% |
| 10-yr. Treasury yield | 4.23% | 4.29% | -1.54% | -10.30% |
| Gold per troy ounce | $834.70 | $808.50 | 3.24% | 30.83% |
After Veterans Day, a busy week
Banks and government offices are closed on Monday for Veterans Day, but markets are open.Market-moving events next week include reports on pending home sales (National Association of Realtors) on Tuesday; retail sales (Commerce Department) on Wednesday; wholesale inflation (Labor Department) on Thursday and consumer prices (Labor Department on Friday.
In addition, some big earnings report hit next week, including Wal-Mart Stores (WMT, news, msgs) on Tuesday, HSBC (HBC, news, msgs) and Macy's (M, news, msgs) on Wednesday and Starbucks (SBUX, news, msgs) on Thursday.
Wachovia's warning sends shivers
Wachovia said that it suffered a $1.1 billion pretax loss in October because of continued problems in the credit markets. In a filing with the Securities and Exchange Commission, the company said it is setting aside between $500 million and $600 million to cover losses in the fourth quarter."It's Wachovia's turn. This is something that is going to continue to happen with a lot of banking institutions," Matt Zeman, a LaSalle Futures Group trader, said on CNBC Friday.
Wachovia took a $1.3 billion write-down for bad bets on collateralized-debt obligations in the third quarter.
Later, Bank of America and JPMorgan Chase warned they could see more losses from subprime mortgages unless the market for securities based on the mortgages improves. Bank of America finished up 1.1% to $43.98. JPMorgan closed down 0.7% to $42.31.
Barclays' big denial
British bank Barclays (BCS, news, msgs) isn't helping the markets either.A bank spokesman denied rumors that it would take a $10 billion charge for bad mortgage bets and that top executives might resign amid the mortgage-market turmoil. Yet there was no comment about any overall write-down, causing shares to fall $1.86, or 3.2%, to $40.02 Friday.
Stock Charts (Year)
Barclays
Merck
According to estimates from Bloomberg News and The Associated Press, financial-services companies have written down between $40 billion and $55 billion so far this year.
Merck to settle Vioxx suit
Pharmaceutical behemoth Merck (MRK, news, msgs) is ready to pay $4.8 billion to settle thousands of claims stemming from its Vioxx painkiller.Shares of Merck were up as much as 5% during the day but finished with a 2.1% gain to $55.90.
Under terms of the agreement, Merck won't admit any wrongdoing or fault; a deal will go forward only if 85% of the approximately 47,000 plaintiffs agree to drop their cases against Merck.
Of the 27,000 cases that have been filed, Merck has won 11 and lost five.
Vioxx was introduced in 1999. Sales peaked at $2.5 billion in 2003 before the company pulled it from shelves a year later after a study showed the drug caused heart attacks in some patients.
| Mon. | Fri. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 3.170% | 3.280% | -0.110 | -17.02% | -35.11% |
| 5-year Treasury note yield | 3.756% | 3.802% | -0.046 | -9.86% | -20.10% |
| 10-year Treasury note yield | 4.225% | 4.273% | -0.048 | -5.59% | -10.30% |
| 30-year Treasury bond yield | 4.602% | 4.662% | -0.060 | -3.14% | -4.48% |
| Currencies | |||||
| U.S. Dollar Index | 75.39 | 75.46 | -0.06 | -1.45% | -9.56% |
| British pound in dollars | $2.0907 | $2.1079 | -0.0172 | 0.48% | 6.69% |
| Dollar in British pounds | £0.4783 | £0.4744 | 0.0039 | -0.48% | -6.27% |
| Euro in dollars | 1.4682 | 1.4682 | 0.0000 | 1.42% | 11.23% |
| Dollar in euros | € 0.6811 | € 0.6811 | 0.0000 | -1.40% | -10.10% |
| Dollar in yen | 110.68 | 112.65 | -1.97 | -4.10% | -7.01% |
| Commodities | |||||
| Gold | $834.70 | $837.50 | -$2.80 | 4.95% | 30.83% |
| Copper | $3.1455 | $3.2040 | -$0.059 | -9.43% | 9.56% |
| Silver | $15.5450 | $15.5150 | $0.03 | 7.67% | 19.95% |
| Crude oil (NYMEX) (per barrel) | $96.32 | $95.46 | $0.86 | 1.89% | 57.77% |
Qualcomm's weak forecast hit shares
Qualcomm reported late Thursday that earnings for its fiscal fourth quarter rose 84% to $1.13 billion, or 67 cents per share, up from $614 million, or 36 cents per share, in the same period last year.Excluding charges, Qualcomm earned 54 cents per share, a penny ahead of Wall Street's consensus estimate.
The company forecast earnings for the current quarter to be between 50 and 52 cents per share; the consensus estimate is for 52 cents per share.
Consumer sentiment falls
Consumers haven't been thrilled with the economy this month, according to a survey.The University of Michigan/Reuters survey of consumer sentiment fell to a reading of 75 from a reading of 80.9 in October. Economists had expected a decline to 79.5.
November's reading is the lowest since October 2005.
More from MSN Money
With Friday's loss, the stock is off 10% in October.
Priceline shares jump on upgrade
Shares of online travel agent Priceline.com (PCLN, news, msgs) soared 23.1% to $103.68 Friday after announcing late Thursday that third-quarter profit jumped to $104.4 million, or $2.27 per share, from $48.8 million, or $1.05 per share, a year ago.Priceline.com also said fourth-quarter earnings would be between 77 cents and 85 cents per share; Wall Street's estimate is 77 cents per share.
Stifel Nicolaus boosted its price target on the stock to $110 from $105.
| Mon. | Fri. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $96.32 | $95.46 | $0.86 | 1.89% | 57.77% |
| Heating oil (per gallon) | $2.6188 | $2.6058 | $0.0130 | 4.43% | 63.89% |
| Natural gas (per million BTU) | $7.8970 | $7.7130 | $0.1840 | -5.20% | 25.37% |
| Unleaded gasoline (per gallon) | $2.4560 | $2.4376 | $0.0184 | 4.96% | 53.30% |
Estée Lauder names new chief
Estée Lauder (EL, news, msgs) will no longer be run by someone from the Lauder family.The makeup company announced that Fabrizio Freda, former president of global snacks at Procter & Gamble (PG, news, msgs), will become president and chief operating officer on March 3.
The company plans to have Freda succeed CEO William Lauder sometime in the next two years. Lauder has been CEO since 2004, but his father, Leonard Lauder, has remained as chairman.
Shares were up 7.7% to $44.25.
ESPN's a winner but can't help Disney shares
Disney (DIS, news, msgs) late Thursday reported fiscal-fourth-quarter net income of $877 million, or 44 cents per share, up 12% from $782 million, or 36 cents per share, in the same period last year, thanks in part to ESPN's "Monday Night Football."Revenue grew 3% to $8.93 billion.
Excluding items, Disney earned 42 cents per share, a penny ahead of the consensus estimate.
Profit at the company's cable channels, which include the Disney Channel, ABC and ESPN, rose 30% to $1.1 billion.
"The key driver was significant growth at cable networks, with a strong performance at the Disney Channel," Lehman Bros. analyst Anthony DiClemente told Bloomberg News.
Revenue at the company's theme parks rose more than 8% to $430 million.
But Disney shares fell 89 cents, or 2.7%, to $32.74 and was off an additional 24 cents in after-hours trading to $32.50.
| Close | Chg. for wk. | Chg. for month | YTD chg. | |
|---|---|---|---|---|
| S&P 500 Index | 1,453.70 | -3.71% | -6.18% | 2.50% |
| Energy | 566.75 | -1.53% | -3.20% | 24.42% |
| Materials | 257.88 | -2.32% | -4.99% | 19.08% |
| Industrials | 354.08 | -3.25% | -4.65% | 9.75% |
| Consumer discretionary | 268.30 | -4.72% | -7.47% | -11.43% |
| Consumer staples | 290.18 | -0.19% | -1.60% | 8.11% |
| Healthcare | 404.62 | -1.61% | -3.48% | 4.09% |
| Financials | 406.32 | -4.22% | -10.17% | -17.97% |
| Information technology | 398.71 | -8.87% | -9.66% | 11.91% |
| Telecommunications | 165.52 | -3.35% | -5.95% | 6.69% |
| Utilities | 212.27 | -0.09% | -1.64% | 13.76% |
By Charley Blaine and Elizabeth Strott
Rate this Article
High