Stocks Post Worst Week in Over 4 Years

Traders work at the New York Stock Exchange, Thursday, March 1, 2007 in New York. Wall Street tried to stage a comeback Thursday, with the Dow Jones industrials erasing much of a 209-point drop after an upbeat assessment of manufacturing activity eased some fears about a flagging U.S. economy. (AP Photo/Mark Lennihan) (Mark Lennihan - AP)

Diane Dercher, chief economist at Waddell & Reed, said investors are trying to sort through the myriad signals the markets have given off this week.

"Fundamentally, I don't think a lot has changed this week and I think it's been more of a psychological re-evaluation of risk and a lot of this is focused around what's happened in the Asian markets," she said.

"There is a renewed focus on how weak the economy is going to be and the data that we've gotten this week have been very mixed and that just adds to confusion," Dercher said.

Investors seemed unfazed by the final Reuters/University of Michigan consumer sentiment reading for February, even as it fell to 91.3 from 96.9 from January. Earlier this week, the Conference Board said its own measure of consumer confidence reached a 5 1/2 year high.

With Friday offering little of the economic data that had at turns boosted and deflated sentiment during the week, investors again looked abroad for direction. Performance of overseas markets has taken on renewed importance this week after a nearly 9 percent drop in the Shanghai Composite Index helped touch off the worldwide selling and sent U.S. stocks reeling. The major U.S. indexes each lost more than 3 percent Tuesday, erasing $632 billion in shareholder equity, according to S&P.

The pullback in stocks came after an enviable run-up. The stock market had gone more than 45 months without a drop of more than 2 percent in a single session _ until Tuesday, when concerns the economy would slow and dent corporate profits came to a boil.

Fed Chief Ben Bernanke told Congress during the week that a single event didn't trigger Tuesday's slide, which was the biggest point drop in the Dow since trading resumed following the Sept. 11 attacks. While the drop brought many tense moments for investors, many observers said stocks were overvalued and were due to consolidate.

On Friday, St. Louis Federal Reserve President William Poole told reporters in Santiago, Chile, the week's pullback didn't appear to be "a huge issue," according to wire service reports.

With trading Friday less frenetic than in previous days, investors had some time to parse individual stocks as they looked for bargains.

AIG's fourth-quarter profit rose sharply from a year earlier when the world's largest insurer spent $1.64 billion to settle charges over its accounting practices. Profits were slightly below Wall Street's forecast though investors were likely pleased by the company's announcement it would repurchase $5 billion in stock in 2007. The company also is targeting a 20 percent annual increase in its dividend. AIG rose $2.13, or 3.2 percent, to $69.54.

Dell Inc. rose 17 cents to $23.18 after the computer maker's profit fell 33 percent amid weak laptop sales. While revenue fell more than expected, the overall results weren't as sour as some investors had feared.

Gap Inc. fell 63 cents, or 3.3 percent, to $18.40 after the company's fourth-quarter earnings dropped 35 percent amid problems that include its newest chain, which the company plans to close.

Subprime lenders fell again Friday as investors remained concerned about soured loans. New Century Financial Corp. warned it would restate financial results for three quarters last year to fix accounting errors for losses related to bad loans. New Century fell $1.20, or 7.6 percent, to $14.65.

Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where consolidated volume came to 3.36 billion shares, compared with an unusually heavy 3.92 billion shares traded Thursday.

The Russell 2000 index of smaller companies fell 15.59, or 1.97 percent, to 775.44.

Overseas, Japan's Nikkei stock average closed down 1.35 percent, while the Shanghai Composite Index was up 1.23 percent and Hong Kong's Hang Seng index added 0.49 percent. Britain's FTSE 100 finished higher by less than 0.01 percent, Germany's DAX index fell 0.56 percent, and France's CAC-40 slid 0.62 percent.

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The Dow Jones industrial average ended the week down 533.38, or 4.22 percent, at 12,114.10. The Standard & Poor's 500 is down 64.02, or 4.41 percent, at 1,387.17; the Nasdaq composite is down 147.10, or 5.85 percent, at 2,368.00.

The Russell 2000 index closed the week down 51.20, or 6.19 percent, to end at 775.44.

The Dow Jones Wilshire 5000 Composite Index _ a free-float weighted index that measures 5,000 U.S. based companies_ ended the week at 14,060.13, down 669.70 points from last week. A year ago the index was at 13,022.96.

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