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Wall Street slides as HP’s view adds to uncertainty

Wall Street slides as HP’s view adds to uncertainty
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First Published: Sat, Aug 20 2011. 12 38 AM IST
Updated: Sat, Aug 20 2011. 12 38 AM IST
New York: U S stocks fell on Friday as Hewlett-Packard’s weaker outlook and corporate shakeup added to the uncertainty for investors.
Investors have been worried that the United States and the global economy may be headed for another recession. The S&P 500 dropped another 4.5% on Thursday, the sixth time in the past two weeks the index has moved 4% or more
Hewlett-Packard’s shares tumbled nearly 23% to a six-year low at $22.76, and were the biggest drag on the Dow, a day after the company said it may spin off its PC business, the biggest in the world, and lowered its outlook. At mid-afternoon, the stock was down 20.5% at $23.43.
IBM shares, down 3% at $158.89, also ranked among the Dow’s biggest losers.
“What I’m seeing right now is a basically a crisis of confidence, more so than an economic crisis or financial crisis necessarily at this stage,” said Natalie Trunow, chief investment officer of equities at Calvert Investment Management in Bethesda, Maryland, which manages about $14.8 billion.
“I’m still looking at a potential positive surprise in the third or fourth quarter this year,” she said, but added that volatility is to be expected, given what’s been thrown at the market, including an unprecedented downgrade of the United States’ top-tier credit rating.
The Dow Jones industrial average slid 128.13 points, or 1.17%, to 10,862.45. The Standard & Poor’s 500 Index fell 12.65 points, or 1.11%, to 1,128. The Nasdaq Composite Index dropped 27.64 points, or 1.16%, to 2,352.79.
The S&P 500 fell below 1,130, a key resistance level during last summer that is becoming strong support. Analysts see the next support at 1,100.
“It’s been a difficult week and confidence that this is just a soft patch or slowdown is declining every day, so I just think more investors are just concluding it’s not a good idea to own stocks over the weekend,” said Hugh Johnson, chief investment officer of Hugh Johnson Advisors LLC in Albany, New York.
Google Inc lost 2.1% to $494.31 and helped drag on the Nasdaq.
In early trading, the three major U S stock indexes swung between positive and negative from the open, reflecting the volatility that has rocked markets in the past weeks.
The CBOE Volatility Index or VIX , Wall Street’s favorite barometer of investor anxiety, was up 2.5% at 43.73.
The S&P 500 is down 17% from its 29 April closing high, well within a correction and edging close to bear market territory. For the year, the S&P is down 10%.
Wall Street typically defines a correction as a drop of 10% from a recent peak, while a slide of 20% from a recent high is a bear market.
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First Published: Sat, Aug 20 2011. 12 38 AM IST
More Topics: Markets | Wall Street | S&P | US Stocks | Dow Jones |