NEW YORK, April 15 -- Stocks plunged to new lows for the year on Friday as investors reacted fearfully to a poor earnings report from IBM and to fresh data suggesting the economy is softening and that consumers, long the bulwark of U.S. economic growth, are beginning to lose confidence.
The Dow Jones industrial average sank 191.24 points, or 1.9 percent, to close at 10,087.51. It was the biggest one-day drop for the Dow since May 19, 2003, and the third day in a row of triple-digit declines. For the week, the Dow lost 373.83 points, or 3.6 percent.
New York Stock Exchange floor traders work yesterday, the third day in a row the Dow saw a triple-digit drop.
(Richard Drew -- AP)
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The stock market has lost much of the gains it enjoyed in the closing months of last year, when a decisive end to the presidential election, robust economic growth and soaring corporate profit helped share prices advance.
That bullish mood has instead given way to one of intense anxiety in which all news is viewed negatively and not even strong earnings reports, such as those this week from Pepsi, General Electric, Citigroup and Apple Computer, can overcome fears of a slackening economy, a bulging trade deficit and a worn-out consumer struggling to keep up with higher energy costs.
"We are getting some okay earnings numbers, but all of the macroeconomic reports suggest the economy is weaker than people thought not very long ago," said Henry J. Herrmann, chief investment officer at mutual fund firm Waddell & Reed Financial. "All of this together is just confusing the heck out of people."
Not all the earnings news has been positive, however. After the market closed Thursday, IBM reported that it missed Wall Street earnings estimates by 5 cents per share because it had a hard time closing deals at the end of the quarter. The report, which came four days early, created concern about the strength of the technology sector and helped send international markets lower Friday because of fears that a slowdown in the world's largest economy would ripple across the globe. Markets in Europe and Asia were all down on Friday, some more than 2 percent.
The mood turned darker as the day unfolded on Wall Street and traders and money managers digested a report from the Federal Reserve saying factory output dropped 0.1 percent in March. A separate report from the Federal Reserve Bank of New York showed the state's manufacturing growth slowing in April, increasing fears that the economy has hit a soft patch at best and a serious slowdown at worst.
Meanwhile, traders also pored over a private report from the University of Michigan suggesting consumer confidence fell in early April. All the bad news on Friday came on top of previous reports showing poor retail spending in March and sluggish job growth of 110,000 new positions for the month, less than half the February increase.
"Over the last 30 days, oil prices made another run, we had weak employment numbers, weak retail sales and dropping consumer confidence," said James W. Paulsen, chief investment strategist at Wells Capital Management in Minneapolis. "And IBM's numbers certainly didn't help."
The confusion and fear in the market are evident in the structure of recent declines. Shares in companies that provide raw materials for a growing economy, such as aluminum maker Alcoa, have been in retreat. Stocks that tend to do well even in a poor economic environment, such as health care and consumer staples firms, have been among the few bright spots.