US stocks plummeted Friday, capping off five days of stunning losses that handed the Nasdaq composite index its worst weekly performance of all time and the Dow Jones industrial average its steepest one-session point loss in history.
The Dow tumbled more than 600 points, trouncing the previous record and triggering circuit breakers at the New York Stock Exchange. The sell-off gave the Nasdaq its biggest point loss of all time, topping the last No. 1 plunge set just five days ago.
But the statistical standout could be this: the Nasdaq fell more than 25 percent this week, trouncing the 19 percent fall that began Oct. 21, 1987, Black Monday.
Friday's plunge came after the government said prices at the consumer level showed surprising strength last month, triggering fears that the Federal Reserve may raise interest rates more aggressively.
The Nasdaq composite index shed 355.61 points, or over 9 percent, to 3,321.17, its biggest one-day decline on record. At one point during the trading session, the Nasdaq was down 411 points. The index lost over 1,000 points this week and is now off more than 34 percent from its record high set March 10 - well beyond the 20 percent decline Wall Street sees as the beginning of a bear market.
Meanwhile, the Dow Jones industrial average skidded 616.23 points to 10,307.32, off over 5 percent, but an improvement from its 722-point drop in the last hour of trading. The broader S&P 500 index fell 83.20 to 1,357.31.
"They're selling the good with the bad because they can. They're throwing everything out the window and that's irrational," Brian Finnerty, head of Nasdaq stock trading at C.E Unterberg Towbin, told CNN's Street Sweep. "But that's also when a bottom is formed."
Still, analysts were quoted by CNN as saying little fresh fundamental news was behind the week's losses. Instead, months of greed that fueled one of the greatest bull markets in history turned to fear on changing sentiment that the highest flying technology stocks rose too far, too fast.
Gail Dudack, market strategist at Warburg Dillon Read, told CNN's Street Sweep that some of the losses could be linked to investors who, faced with losses, sold stocks to meet their brokers' margin account requirements As investors dump overpriced stocks to either meet margin calls or take profits before the highflying technology leaders plummet any farther, bargain hunting may be on the horizon.
Decliners outpaced advancers on the New York Stock Exchange 2,702 to 386 as more than 1.1 billion shares changed hands. Losers beat winners on the Nasdaq 4,018 to 511 on volume of more than 2.4 billion shares.
The dollar weakened against the euro and the yen. Treasury securities edged lower.
STRONG EARNINGS NOT ENOUGH TO ATTRACT BUYERS
Bank stocks, which rallied earlier in the week after some strong earnings reports, were among the biggest losers. J.P. Morgan (JPM: Research, Estimates) slid 9-7/16 to 122-1/16, Citigroup (C: Research, Estimates) lost 4-13/16 to 57-3/4, and American Express (AXP: Research, Estimates) dropped 12-1/4 to 133-3/4.
Solid earnings have lifted individual stocks, but failed to support entire sectors, causing wild sell-offs instead of attracting a surge of bargain hunters.
TAIWAN SLUMPS AS ASIAN MARKETS BRACE FOR WALL STREET BACKLASH
Taiwan's stock market plunged Saturday as Asian markets braced for a severe backlash next week after the record falls on Wall Street.
Most bourses across the region were closed Saturday but an early indication that Asia is in for a rough ride came in Taiwan, where the market plunged 5.4 percent.
The Taiwan Stock Exchange weighted price index plummeted 507.81 points to 8,866.80, following a three-percent decline in the previous session.
"Foreign investors, who have been on the selling side over the past few days, worked overtime on Saturday to sell more stocks to cope with heavy redemption pressure," Tu said.
The record losses on Wall Street have left regional analysts gloomy about Asian prospects for the coming week.
In Tokyo, Tsuyoshi Segawa, head of Sakura Securities Co. Ltd.'s equity department, said a fall was "inevitable."
"Given the big presence of foreign investors in the Tokyo market since last year, their selling could lead domestic (Japanese) investors to sell, inviting a market drop here."
South Korean analysts were also pessimistic about Seoul markets following the fall.
On Friday, the index at the main stock exchange board slumped 4.3 percent at at 800.89 while the tech-heavy KOSDAQ index also fell 6.2 percent to close at 195.87 points on Nasdaq's overnight fall – (Several Sources)— Photo AFP.
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