TODAY'S PAPER
65° Good Afternoon
65° Good Afternoon
Business

Stock setback: All news is bad news

The stock market suffered its worst setback in more than 10 months this week as investors decided no matter what the news, it must be bad.

The Dow Jones industrial average slid 217 points, or 2.1 percent, on Friday, its fourth big drop in five trading days.

Wednesday-Friday, the Dow lost 552 points, or 5.2 percent. All the major indexes fell more than 2 percent Friday.

Investors continued to worry about President Barack Obama's plan to restrict big banks. They decided that good earnings reports weren't good enough. They didn't like mounting opposition to the reappointment of Federal Reserve chairman Ben Bernanke. And they were still uneasy that a possible economic slowdown in China might spread.

Stocks have had their worst showing since they began their recovery last March. The market also is seeing the kind of volatility that dominated the market's long slide - the Dow has had a triple-digit move five straight days for the first time since December 2008.

The Dow lost 4.1 percent this week, its worst week since it hit a 12-year low in early March. It had reached its highest level since Oct. 1, 2008, only this past Tuesday, closing at 10,725.43. On Friday, it closed at 10,172.98.

John Brady, a senior vice president of global interest rates at MF Global, said concerns surrounding Obama's plan and China's efforts to slow its economy have investors reducing risk.

Obama rattled the market Thursday after asking Congress for limits on how large big banks can be and to end some of the risky trading large financial companies have used in recent quarters to boost their profits. It's not clear what will come of the proposed changes but investors are selling anyway.

The Standard & Poor's 500 index fell 24.72, or 2.2 percent, to 1,091.76. The index is down 5.1 percent in three days, its worst drop since March 2009. Friday's drops were the worst for the Dow and the S&P 500 index since Oct. 30. The Nasdaq composite index fell 60.41, or 2.7 percent, to 2,205.29. For the week, the Dow lost 4.1 percent, the S&P 500 index slid 3.9 percent, and the Nasdaq lost 3.6 percent.

There is more uncertainty for the markets next week, and not just because more earnings reports will arrive. The Fed holds its first meeting on interest rates of 2010. No one expects the central bank to boost rates but investors will be looking for the Fed's take on the economy.

Bernanke, whose term ends Jan. 31, is still waiting for the Senate to confirm his reappointment to another term. But a growing number of senators are blaming the Fed chairman for the nation's economic problems.

Comments

We're revamping our Comments section. Learn more and share your input.

More news