WSJ(7/17) Friday's Markets

Fri Jul 16 19:54:00 EDT 2010

(From THE WALL STREET JOURNAL)
By Mark Gongloff
After resisting for much of the week, the stock market finally toppled under a barrage of
disappointing economic news and mixed earnings reports.
The Dow Jones Industrial Average on Friday sank 261.41 points, or 2.5%, to 10097.90, its
lowest since July 7. It was the worst one-day selloff since June 29. The Nasdaq Composite Index
fell 70.03 points, or 3.1%, to 2179.05, its lowest since July 8. The Standard & Poor's 500-stock
index fell 31.60 points, or 2.9%, to 1064.88.
Every Dow component was down. The least-bruised names were relatively defensive companies
like AT&T and Procter & Gamble, each down about 1%.
The worst performers were Bank of America and General Electric, down 9% and nearly 5%,
respectively. Each reported second-quarter earnings that beat Wall Street forecasts, but also
declines in revenue at an inopportune moment, just when the economy seems to be losing
momentum.
The latest evidence of that came from the University of Michigan, which reported its consumer-
confidence index dropped in July to its lowest level since last August. Economists expected a
much smaller decline.
The report followed a string of downbeat data throughout the week, including a second
consecutive monthly decline in retail sales, which caused research firm Macroeconomic
Advisors to cuts its estimate of annualized second-quarter economic growth to 2.1% from 3.2%.
Until Friday, the stock market had weathered the bad news, thanks to some solid earnings
reports. Many observers had hoped that the market had put in its lows for the year during its late-
June swoon.
But Friday's selloff erased all of the gains the market had made during the week and left its
course again in doubt. The Dow ended the week down 1%.
"There is a high likelihood that we'll see quite bit of weakness going into the end of the year and
into 2011," said Peter Cecchini, chief strategist at BGC Capital. "The S&P below 1000 by the
end of the year would not be surprising to me."
Google tumbled 7% a day after the tech bellwether reported disappointing results.
Market-anxiety indicators edged up. The cost of protecting against an investment-grade
corporate-bond default rose nearly 5%, according to Markit. The Chicago Board Options
Exchange volatility index, or VIX, rose more than 4%.
Treasury debt again benefited from a flight to safe-haven assets. As prices rose, the 10-year
Treasury yield dropped to 2.943%, the lowest since July 6.
Gold lost more than 1% to retreat below $1,200 a troy ounce. Oil fell 61 cents, to $76.01.
Disclaimer
(This article is general financial information, not personalized investment advice, as it does not
consider the unique circumstances affecting an individual reader's decision to buy or sell a
specific security. Dow Jones does not warrant the accuracy, completeness or timeliness of the
information in this article, and any errors will not be made the basis for any claim against Dow
Jones. The author does not invest in the instruments or markets cited in this article.)