Tech woes send Nasdaq to 14-month low
NEW YORK – Wall Street wrapped up a volatile week with a down session Friday as conflicting news from the technology sector exacerbated investors’ uncertainty about earnings and sent the Nasdaq composite index to its lowest close in 14 months. The major indexes finished the week mixed after swerving sharply session to session.
The mix of technology news failed to clear up any of the uncertainties Wall Street faces regarding corporate earnings. Meanwhile, Federal Reserve Chairman Ben Bernanke’s testimony on Capitol Hill this week was seen as bullish on the economy, but also a warning that inflation is gaining traction and that more interest rate increases are likely.
“The market’s becoming very, very touchy, very news sensitive,” said Hugh Johnson, chief investment officer at Johnson Illington Advisors. “If it’s good news, the market goes up. If there’s even some bad news, the market goes down. And it’s because politics, economics and earnings are all dark clouds hanging over this market.”
The Nasdaq dropped 19.03, or 0.93 percent, to 2,020.39 after plunging 41.29 Thursday. It was the lowest finish for the Nasdaq since May 17, 2005, when it closed at 2,004.15.
The Dow Jones industrial average fell 59.72, or 0.55 percent, to 10,868.38, while the Standard & Poor’s 500 index lost 8.84, or 0.71 percent, to 1,240.29.
Trading volumes were particularly high because of the expiration of options contracts, which causes a flurry of transactions as those contracts are filled and new ones created. Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to 1.93 billion shares, compared with 1.7 billion traded Thursday.
Bonds edged lower, with the yield on the benchmark 10-year Treasury note rising to 5.04 percent from 5.02 percent late Thursday. The dollar lost ground against other major currencies, while gold prices also fell.
Wall Street’s wild ride this week, with major rallies and selloffs encapsulated in single trading sessions, reflects the continued confusion plaguing investors. With corporate earnings a mix of disappointments and pleasant surprises, and inflation data showing consumer prices creeping higher, traders have found few patterns to support either buying or selling.
For the week, the Dow gained 1.2 percent and the S&P 500 added 0.3 percent, while the weakness in tech earnings led the Nasdaq 0.83 percent lower.
“We certainly think we’re going to be in a volatile market, and we’ll be in this wide and sloppy trading range for the foreseeable future, perhaps for the entire summer,” said Jack Caffrey, equities strategist at J.P. Morgan Private Bank. “Investors are very much in a reactive mode, and that’ll create the choppy trading you’ve seen.”
The Russell 2000 index of smaller companies was down 11.67, or 1.71 percent, to 671.94.
Overseas, Japan’s Nikkei stock average fell 0.84 percent. In Europe, Britain’s FTSE 100 closed down 0.89 percent, France’s CAC-40 was lost 0.96 percent for the session, and Germany’s DAX index slid 1.71 percent.