Stocks Fall Again As Another Bank Tallies Its Losses

Wall Street ended a turbulent week Friday with stocks plunging after a major U.S. bank announced a large write-down because of its subprime mortgage losses and technology stocks took a severe hit.

The Dow Jones industrial average dropped 223.55 points, or 1.7 percent, to 13,042.74. The Dow was down 4.1 percent for the week. The broader Standard & Poor's 500-stock index fell 21.07 points, or 1.4 percent, to 1453.70 and was down 3.7 percent for the week.

Wachovia wrote down the value of its loan-backed securities by about $1.1 billion, and said it would set aside as much as $600 million for loan losses in the fourth quarter. The news sent the bank's shares tumbling early in the day before they recovered to post a gain of 35 cents to $40.65. Problems at Wachovia, Fannie Mae and other financial institutions sparked fears among investors that the problems in the subprime loan market, which caters to people with blemished credit, are not over and would continue to have a broad impact on the economy.

"It's a mess, and obviously the focus right now is on the credit markets and the possibility of deep ongoing losses in the banks and brokerages," said Christopher Low, chief economist for FTN Financial. "The sense is there are other banks that are going to follow that lead."

The technology sector, which had been virtually unscathed by the credit crisis, showed signs of weakness this week, with the wireless company Qualcomm warning of a drop in business into next year. Cisco Systems, a maker of computer networking equipment that is considered a bellwether for the technology sector, made a similar pronouncement.

The technology-heavy Nasdaq composite index plunged 68.06, or 2.5 percent, to 2627.94. It was down 6.5 percent for the week.

"It was really interesting to see that the mighty Cisco is not immune from the problems we were seeing in the U.S. economy," said Wendell Perkins, chief investment officer at Johnson Asset Management. "I think investors probably thought tech would be immune from that."

Other technology stocks such as Google and Apple also have posted losses in recent days.

Andy Brooks, head of stock trading at T. Rowe Price, likened the week's activity to that of the turmoil that gripped Wall Street in August, when a rise in mortgage foreclosures and growing concerns over the housing slowdown sent stocks into a nosedive.

"It was a tough week for investors," Brooks said. "It's hard to know when we're going to be through most of the damage from the write-downs and the losses related to subprime exposure. It reminds us of the period we had the first couple of weeks in August, which were brutal."

This time, he and other analysts said, the problems are compounded by rising oil prices, crises in the Middle East, the sinking value of the dollar and weaknesses in corporate earnings.

Federal Reserve Chairman Ben S. Bernanke's comments this week that the economy was likely to slow through the first half of 2008 also weakened investor confidence.

"This time it's just a variety of negative news from the retailers, from the tech companies, internationally," said Randy Bateman, chief investment officer of Huntington Asset Advisors. "It's just unfortunately kind of a perfect storm of bad news this week."

Movers

Fannie Mae fell 80 cents, to $49.

Qualcomm fell $1.66, to $38.10.

Estee Lauder rose $3.17, to $44.25. Former Procter & Gamble food-snacks president Fabrizio Freda is to replace chief executive William Lauder within two years.