Wall Street's Bleak Week

July 12, 2002

(CBS) An ugly week on Wall Street ended on an ugly note Friday, as the Dow closed with another triple-digit decline, its fourth in the past five sessions.

The Dow Jones average of industrial stocks dropped 117 points, or 1.33 percent, to 8684.53. The blue chips had been down by more than 200 points earlier in the afternoon.

For the week, the Dow was down nearly 695 points, including a 280-point drop on Wednesday, its biggest one-day loss since September.

Friday’s losses came amid conflicting economic reports. Investors were shaken by a drop in a measure of consumer confidence and a downgrade of Home Depot. As trading wore on, they were less soothed by positive forecasts from Dell Computer and General Electric.

``What the market is saying is: Be very defensive,'' said Gary Kaltbaum, market technician for Investors' Edge Partners in Orlando, Fla.

The market's broader indicators also fell Friday. The Nasdaq composite index slipped 0.94, or 0.07 percent, to 1,373.49. Earlier on Friday, the Nasdaq rose as much as 28.

The Standard & Poor's 500 index fell 5.97, or 0.6 percent, to 921.40.

Trading was volatile, especially for the Dow, which swung from a gain of 47 points to a loss of 201.

Analysts attributed the fluctuations to a program trading in which computers generate ``buy'' orders when stocks fall to a specified level and ``sell'' orders when stocks rise. There was no fundamental change in market sentiment to drive the selling.

``The tone is still bearish,'' said Larry Wachtel, market analyst at Prudential Securities.

Flogged by investors' persistent worries about corporate accounting scandals and the strength of earnings, the market's indexes suffered their eighth straight losing week.

On Friday, investors were disappointed by news about consumers, whose spending accounts for two-thirds of the economy. The University of Michigan's consumer sentiment index for mid-July registered a reading of 86.5, down from 92.4 in June, according to Dow Jones Newswires.

That drop in consumer sentiment overshadowed a positive report from the Commerce Department, which said that retail sales rose 1.1 percent in June, better than the 0.7 percent increase analysts had forecast. Analysts said that the market is more concerned about how investors are feeling now, rather than how much they spent last month.

Retailing shares fell sharply. Kohl's sank $2.21 to $66.99, while Wal-Mart stumbled $1.33 to $52.85.

And Dow industrial Home Depot fell $2.31 to $29.09 after Merrill Lynch downgraded the stock to ``neutral'' from ``strong buy,'' citing weak sales and depleted inventories.

Accounting worries continued to plague Wall Street. Duke Energy dropped $3.20 to $24.75, on news that it has received subpoenas from the Commodity Futures Trading Commission and the Houston office of the U.S. attorney for information related to its trading activities.

There were some winners, however. Dell rose $1.09 to $25.02 after raising its second-quarter earnings and revenue estimates.

And Dow industrial GE advanced $1.25 to $28.60 after reaffirming its outlook for the year and meeting second-quarter expectations.

Declining issues outnumbered advancers nearly 3 to 2 on the New York Stock Exchange. Volume was relatively heavy.

The Russell 2000 index, which tracks smaller company stocks, fell 3.43, or 0.8 percent, to 413.25.

Overseas, Japan's Nikkei stock average finished Friday up 1.1 percent. In Europe, France's CAC-40 inched up 0.04 percent, Britain's FTSE 100 slipped 0.1 percent, and Germany's DAX index rose 0.3 percent.

http://www.cbsnews.com/stories/2002/07/05/national/main514340.shtml