Dow, S&P end 6th losing week - is 7th on tap?
Dow, S&P end 6th losing week - is 7th on tap?
New York: The Dow and S&P 500 closed out their sixth week of losses on Friday as further signs of a global economic slowdown set the stage for more losses ahead.
The deepening gloom raised the prospect for the S&P, which suffered its worst week since August 2010, to break below the year’s low of 1,250 next week.
The Nasdaq wiped out its yearly gains on Friday and also posted its biggest weekly decline since August 2010, as the latest deterioration in sentiment came on fear of flagging Chinese growth and fresh worries about Greece’s debt crisis.
The Dow closed below 12,000 for the first time since mid-March.
Reflecting the bearish sentiment, options traders eyed calls on the CBOE Volatility Index, Wall Street’s so-called fear gauge, which moves inversely to the S&P 500’s performance. The VIX rose 6.1% to end at 18.86.
“We broke below the April low, which was about 1,295 (on the S&P 500) pretty much at the open today. We are probably going to test the March lows if data next week remain weak," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.
“But investors are very susceptible to any kind of news and since we are very oversold here, we could see the market instantly bounce back if we get anything remotely good."
The Dow Jones industrial average fell 172.45 points, or 1.42%, to 11,951.91. The Standard & Poor’s 500 Index slid 18.02 points, or 1.40%, to 1,270.98. The Nasdaq Composite Index tumbled 41.14 points, or 1.53%, to 2,643.73 at the close.
For the week, the Dow was down 1.6%, the S&P 500 was off 2.2% and the Nasdaq was down 3.3%.
The S&P 500 has fallen about 6.6% from its intraday peak early last month. Many see the benchmark index sliding back down to around 1,250, its March low, where valuations could bring investors back into equities.
At 1,250, the S&P 500 would be roughly 1.7% below current levels and approaching a 10% decline commonly referred to as a correction.
Bank stocks ranked among the session’s top decliners. The Federal Reserve said it plans to expand the number of banks it will subject to annual tests used to determine if stock dividends can be increased and whether an institution is holding enough capital.
The KBW regional banks index fell 1.1%.
“It’s an incremental negative that makes it easier to be negative and sell any financial stocks right now," said Michael James, senior trader at Wedbush Morgan in Los Angeles.
“The financial stocks have been a big weight and an underperformer all year so the path of least resistance in the financials continues to be lower."
The S&P energy index declined 1.9% while the S&P index of industrial stocks lost 1.6%.
China’s sales to the United States and the European Union slumped to their weakest since late 2009, excluding Lunar New Year holidays, underlining the view that the world economy is stumbling.
In another negative for stocks, the euro tumbled more than 1% against the US dollar as fears about Greece’s debt returned to the forefront and investors curbed expectations about the European Central Bank’s interest-rate hikes. Investors have been recently trading the correlation between stocks and the dollar.
The PHLX semiconductor index slid 1.7%, sinking to its lowest since early December. The SOX fell below its 200-day moving average for the first time since last October.
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