Hewlett-Packard leads slump
NEW YORK (Reuters) - Wall Street ended a fourth week of losses on a down note yesterday as most buyers left the market before the weekend on growing fears of another US recession and destabilisation 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 percent, 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 percent 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 percent 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 followed 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 five percent 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 four percent 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 percent to $157.54, while Intel dropped 2.9 percent to $19.19, and Microsoft lost 2.5 percent 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 percent, to end at 10,817.65. The Standard & Poor’s 500 Index dropped 17.12 points, or 1.50 percent, to 1,123.53. The Nasdaq Composite Index slid 38.59 points, or 1.62 percent, to close at 2,341.84.
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 2.8 percent to $490.92 and helped drag on the Nasdaq.
The S&P 500 is down 17.6 percent from its April 29 closing high, edging close to bear market territory. For the year, the S&P is down 10.7 percent.
Wall Street typically defines a correction as a drop of 10 percent from a recent peak, while a slide of 20 percent from a recent high is a bear market.