Wall Street down for fourth week on economic fears

Updated: 2011-08-20 10:15


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Wall Street down for fourth week on economic fears 

A trader reacts on the floor of the New York Stock Exchange in this file image from August 18, 2011. The best thing to be said of the recent stomach-churning turmoil on Wall Street is that it's taking place in August, a time of year when many people are lounging at the beach or camping in the woods and not paying attention to stocks. But for everyone else not on a 'stockation,' watching the markets rise and fall like giant ocean swells has been an unnerving experience that some finance professionals worry could reshape investor behavior for months and years to come.  [Photo/Agencies]

NEW YORK - The sell-off in Wall Street continued on Friday, with major indexes suffering losses for the fourth straight week, as concerns over European debt problems and US economic strength haunted the market.

Investors were depressed after the Dow Jones industrial average plunged more than 400 points in a single day, a reminder of the big turmoil in the market last week.

Traders chose to leave the market before the weekend, in case that the debt situation in Europe turned sour. A meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy earlier this week failed to calm the market as they failed to come up with any plan to increase the size of eurozone's rescue fund or begin sales of euro bonds, further disappointing markets.

Big European banks led the way down while US banks followed suit. The Financial Select Sector SPDR ETF, which tracks financial stocks on the S&P 500 Index, dropped 4.8 percent on Thursday and 2.0 percent on Friday, while the KBW Bank Index ETF fell 5.5 percent and 3 percent respectively.

Technology sector was also hit hard, dragged by Hewlett-Packard, whose shares plunged more than 20 percent after several Wall Street analysts downgraded its stock. The tech-heavy Nasdaq suffered its first four-day losing streak since June.

Worries about an economic downturn in the United States haunted equities. After Morgan Stanley and Goldman Sachs slashed their forecasts for global economic growth on Thursday, Citigroup and JPMorgan Chase cut their US growth forecasts as the global economy slows and officials struggle to stem Europe's sovereign-debt crisis.

Meanwhile, the latest batch of economic data added to the evidence that the US economy was losing steam.

Not only jobs market and housing sector still struggle, manufacturing activities also slowed significantly in some regions. The Philadelphia Federal Reserve Bank reported that its business activity index dropped to minus 30.7 from positive 3.2 the month before, far below expectation, pushing investors over the edge.

As of Friday's close, the Dow Jones industrial average lost 172.93 points, or 1.57 percent, to 10,817.65. The Standard & Poor's 500 dropped 17.12 points, or 1.50 percent, to 1,123.53. The Nasdaq Composite Index declined 38.59 points, or 1.62 percent, to 2,341.84.  

For the week, both the blue-chip Dow and the broader S&P 500 plunged more than 4 percent, while the tech-heavy Nasdaq tumbled 6.6 percent.

Amid the wild swing in equities, gold futures continued its bull run on safe-haven buying. Gold for December delivery, the most actively traded contract, settled up 30.20 dollars, or 1.6 percent, at a new record of 1,852.20 dollars an ounce. The metal soared more than 6 percent in the past week, the biggest weekly gain since February 2009.

US crude oil price ended the week with a 3.65-percent loss, also the fourth straight weekly drop.


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The European Central Bank (ECB) held a conference call late on Sunday ahead of the market opening, pledging the ECB will step in to buy eurozone bonds with efforts to forestall the euro zone's debt crisis from spreading.