In fact, over the past month, health care and consumer staples firms and utilities have been the only companies in the Standard & Poor's 500-stock index to advance. Raw-materials providers have fared worst in the index, dropping 6.2 percent.
Technology companies, heavily dependent on an expanding economy, have been among the hardest hit. The Nasdaq composite index, dominated by big technology firms, dropped 38.56 points Friday, or nearly 2 percent, to close at 1908.15. The Nasdaq is down 12.3 percent for the year. The S&P 500 fell 19.43 points Friday, or 1.7 percent, to close at 1142.62. The index is down 5.7 percent for the year.
New York Stock Exchange floor traders work yesterday, the third day in a row the Dow saw a triple-digit drop.
(Richard Drew -- AP)
Wall St. Week Ahead: Earnings in Focus (Reuters, Apr 16, 2005)
Schwab 1st-Quarter Profit Drops 10 Pct (Reuters, Apr 15, 2005)
Mattel Earnings Drop 28 Percent (Reuters, Apr 15, 2005)
Cree Inc. Profits Aided by Pinball Game (Associated Press, Apr 15, 2005)
Mattel Profit Down on Barbie Brand Decline (Associated Press, Apr 15, 2005)
More Earnings News
IBM, a Dow component, led the declines on Friday, plunging $6.94, or 8.3 percent, to close at $76.60. Big Blue helped drag down other technology shares as well. Hewlett-Packard, for instance, sank 91 cents, or 4.2 percent, to $20.84. Chipmaker Intel dropped 37 cents, or 1.7 percent, to $22.12.
Stephen J. Massocca, head of equity trading at Pacific Growth Equities in San Francisco, suggested that the recent sell-off is rooted more in emotion than economic fact and that the "irrational exuberance" of the late 1990s has been replaced by "irrational pessimism."
He said that instead of embracing reports of modest economic growth as evidence that the Federal Reserve has succeeded in reining in rapid growth and choking off inflation, investors are treating them as possible evidence of a looming global recession.
As an example of the dour mood, Massocca cited a rapid sell-off in shares of Apple even after the maker of the popular iPod music player reported dazzling 70 percent revenue growth in the first quarter.
"Skepticism is running amok," Massocca said. "Absolutely nothing, short of an all-cash [buyout] offer, could have gotten Apple's stock to go up this week. I think we are at an inflection point and that all this pessimism is very much overdone."
Several traders said Friday's selling had the hallmarks of irrational panic, including a rapid sell-off in the closing moments. "It's just been a very sloppy market over the last few days," said John O'Donoghue, co-head of equity trading at Credit Suisse First Boston. "There have been a few bright spots, like utilities and food. . . . But for the most part, people are just throwing the baby out with the bath water."
Herrmann of Waddell & Reed said, "This market is not about rational calm right now. It's about nuts." He said stocks have declined to a point where they are attractive to buy. Shares in the S&P 500, he said, now trade for about 15 times earnings, a modest figure by historic standards.
Paulsen of Wells Capital Management said he sees several potential triggers that could reverse the downward trend, including a run of strong earning reports and positive outlooks from companies for the rest of the year, followed by a strong April jobs report.
"I think the next payroll report is the next big hope," he said. "And we'll get oodles of earnings reports before that. It could turn out that earnings season is fine, and that alone could turn this thing around."
Staff researcher Richard Drezen contributed to this report.