Wall Street ended a fourth week of losses on a down note on Friday as most buyers left the market before the weekend on growing fears of another US recession and destabilization in Europe's financial system.
Investors already reeling from big losses in growth stocks were thumped by a dismal outlook from Hewlett-Packard, which dropped nearly 20 per cent, its worst day since the stock-market crash of 1987.
It was the latest discouraging event in a month full of bad surprises ranging from the US credit rating downgrade to a sharp slowdown in world growth. The S&P has lost 13.1 per cent so far this month -- on track for its worst month since October 2008.
"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.
Hewlett-Packard's shares tumbled 19.9 per cent to a six-year closing low at $23.60 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.
The losses follow a day of sharp declines. At the session lows on Thursday, the Dow was down more than 500 points, while the S&P 500 and the Nasdaq each shed more than 5 per cent at the day's worst.
Worries that the United States and the global economy may be headed for another recession have unnerved investors in recent weeks. Thursday marked the sixth time in the past two weeks that the S&P 500 has moved 4 per cent or more.
Technology stocks bore the brunt of the losses among the Dow components, with H-P, International Business Machines Corp, Intel Corp, and Microsoft Corp among the biggest drags on the blue-chip average. IBM shares fell 3.8 per cent to $157.54, while Intel dropped 2.9 per cent to $19.19, and Microsoft lost 2.5 per cent to $24.05.
"I think it's more of a drift than any real selling here," said Frank Gretz, market analyst and technician for Shields & Co in New York. "It's more common to see a drift down with people more fearful about the weekend ... Who's going to buy before a weekend with all the bad news around?"
The Dow Jones industrial average fell 172.93 points, or 1.57 per cent, to end at 10,817.65. The Standard & Poor's 500 Index dropped 17.12 points, or 1.50 per cent, to 1,123.53. The Nasdaq Composite Index slid 38.59 points, or 1.62 per cent, to close at 2,341.84.
S&P OFF NEAR 11 PCT FOR 2011
For the week, the Dow ended down 4 per cent, the S&P 500 dropped 4.7 per cent and the Nasdaq lost 6.6 per cent.
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.
