Americas

Home page

Americas

US Stocks Close Lower As Global Growth Worries Persist

20 August 2011 01:37 (UTC +04:00)

Baku-APA. U.S stocks closed down Friday amid a dearth of economic data, ending another choppy week lower as investors continued worrying about a potential global recession and the health of the European banking system, APA reports quoting wsj.com website.

The Dow Jones Industrial Average closed down 172.93 points, or 1.57%, to 10817.65. The index swung 284.99 points from its session highs to the lows in another volatile session. The zigzag action comes after the blue-chip index tumbled 419.63 points on Thursday.

Hewlett-Packard Co. (HPQ) was by far the Dow’s biggest decliner as the stock tumbled to a six-year low. Investors fretted about the world’s largest personal-computer maker’s extensive plans to reshape its business model.

The company is exploring a spinoff of its PC business and will abandon efforts to sell tablets and smartphones, a seemingly sharp reversal from management’s previous comments. It also agreed to buy U.K. software firm Autonomy for about $10.25 billion in a bid to move further into data analytics. Shares dropped $5.91, or 20%, to $23.60. The stock took 45 points off the price-weighted Dow.

Fellow blue chip International Business Machines Corp. (IBM) also slumped $6.29, or 3.8%, to $157.54. H-P and IBM combined to account for more than half of the Dow’s declines.

The Standard & Poor’s 500-stock index dropped 17.12 points, or 1.5%, to 1123.53, led lower by technology and financial stocks. All 10 of the S&P 500’s sectors closed in negative territory. The technology-heavy Nasdaq Composite slid 38.59 points, or 1.62%, to 2341.84.

Friday’s lull in market-driven headlines did little to assuage investor concerns about political gridlock in Washington, Europe’s sovereign-debt troubles and the worsening U.S. economy.

"The market hasn’t found its footing yet," said Todd Colvin, vice president at MF Global. "Investor angst remains very high. Good volume associated with a down move typically isn’t a fluke. We’re probably in store for lower prices from here."

Stocks started the week on a strong note, inspired in part by hopes that Europe’s leaders may be nearing some sort of accord to help resolve the spreading debt crisis. A flurry of takeover activity in the U.S. also underscored the resilience of U.S. companies despite the slowing economy.

The optimism, however, proved fleeting as worries about global economic growth have returned. A jarring mix of global growth warnings from several investment banks and broader systemic financial problems have prompted investors to recalibrate their expectations.

The big worry now is the problems surrounding European banks could spillover into the U.S. banking system. Investors are also concerned that European leaders aren’t responding adequately to the debt crisis roiling the euro zone.

The U.S. is on "the brink of recession mode," said John Coyne, president of Brinker Capital. "The dead-cat bounce is over."

Investors digested a slew of economic data on Thursday, including readings on weekly jobless claims, consumer inflation and manufacturing activity from the Philadelphia Federal Reserve. But there weren’t any notable data on the U.S. economic calendar on Friday, leaving investors cautious heading into the weekend.

"We’re going through a period where expectations for the economy are being adjusted lower," said Todd Salamone, director of research at Schaeffer’s Investment Research. "I don’t think a recession is fully priced in at this point."