Stocks cap week with big decline
Published: Saturday, January 26, 2008 at 6:01 a.m.
Last Modified: Friday, January 25, 2008 at 9:23 p.m.
NEW YORK - Wall Street ended a tumultuous week with a sharp decline Friday, backtracking following two days of stunning gains as investors turned cautious and cashed in some of their winnings. The Dow Jones industrial average still managed to record its first weekly advance of 2008, even as it fell more than 170 points on the day.
The week, which started with a 465-point drop in the Dow soon after the market opened Tuesday, showed that the stock market is still fractious but may be going through a healthy process of trying to establish a bottom following weeks of sharp declines.
Investors had an initial burst of enthusiasm Friday, sending each of the major indexes up more than 1 percent, after upbeat profit reports from big names like Microsoft Corp. and word of a possible buyout of a trouble bond insurer. But the advance proved short-lived and the eventual decline wasn't surprising given that investors putting down bets ahead of the weekend were coming off two days of big gains - including 400 points in the Dow.
"People may be looking to take some profits off the table in this volatile market. And there's a lot of activity that's coming up next week,'' Scott Fullman, director of investment strategy for I. A. Englander & Co., said during the day's back-and-forth trading.
The Federal Reserve is expected to hold its first regularly scheduled meeting of the year on Tuesday and Wednesday, and then the Labor Department will weigh in on the state of the job market on Friday.
Despite the pullback, Wall Street's tone Friday stood in sharp contrast to the intensely dour mood from when the week began. To stave off a similar sell-off in the U.S. over recession fears, the Fed stepped in Tuesday with an emergency interest rate cut.
The central bank's move to lower rates by a big 0.75 percentage point to 3.5 percent helped shore up investors' confidence and led stocks to end the day well off their lows, although they still closed down. A day later, on Tuesday, Wall Street had an astonishing about-face, with the Dow swinging more than 630 points and turning a sharp sell-off into huge gains. Stocks then extended their advance Thursday. The Fed is widely expected to cut rates again at next week's meeting; many analysts expect a half-point cut.
Reader comments posted to this article may be published in our print edition. All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.
Comments are currently unavailable on this article