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Dow again down sharply today

Wall St. could be headed to worst week ever

October 10, 2008

NEW YORK (AP) -- Wall Street seesawed but still extended its devastating decline Friday as investors, seeing no resolution to the credit crisis, propelled the Dow Jones industrials to their eighth straight day of losses and worst week ever. Stocks gyrated in the opening minutes as a burst of buying in financial stocks spread to other sectors, and also fluctuated in the final hour of trading.

The hair-trigger mentality of the market was evident from the opening bell. The Dow fell nearly 700 points in the first 15 minutes, recovered to an advance of more than 100 before the first hour was over, then turned sharply lower again. Investors were nervously awaiting the last hour of trading, which has tended to see the heaviest selling over the past week of tremendous losses.

Frozen credit markets and a loss of confidence in the world's financial system have caused the Dow to drop 21 percent in just 10 trading days. The blue chip index tumbled 678 points Thursday, and is heading to its worst weekly point and percentage drop since being created 112 years ago.

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The major indexes had sharp swings throughout the day, likely exacerbated by the computer-driven "buy" and "sell" orders that kicked in when prices fell far enough to make some stocks look like attractive bets or make other investors want to exit the market. The spurts of buying didn't reflect an easing of the market's despair, and so the heavy selling continued.

"Fear has been running rampant all over the Street. Fear and greed, that's what rules the Street. I think the carcass has been stripped to the bone," said Dave Henderson, a floor trader on the New York Stock Exchange for Raven Securities Corp.

Many investors have waited until the final hour of trading each day this week to hit the "sell" button, so investors appeared uneasy about how the market would look at 4 p.m., when the closing bell sounds. The selling can intensify as mutual funds and hedge funds are forced to raise cash to meet investors' "sell" orders and as nervous investors otherwise shy from placing bets in such a jittery market. In addition, Fridays are particularly troublesome as so much news that affects the markets -- from bankruptcies to bailouts -- has arrived in recent weekends.

At the start of Friday's session, losses for the year totaled a staggering $8.3 trillion, as measured by the Dow Jones Wilshire 5000 Composite Index, which tracks 5,000 U.S.-based companies representing nearly all stocks traded in the U.S.

In the final hour of trading, the Dow fell 135.80, or 1.58 percent, to 8,443.39. At its low point Friday, the Dow was down 696 at 7,882.51, just 60 points above its low in Wall Street's last bear market, 7,286.27, reached Oct. 9, 2002.

Broader stock indicators also fell. The Standard & Poor's 500 index declined 22.16, or 2.44 percent, to 887.76, while the Nasdaq composite index fell 27.42, or 1.67 percent, 1,617.70.

The Dow, which began the session down 16.9 percent since Monday, was on track for its worst weekly decline ever. Previously, the worst performance came in the week ended July 21, 1933, when the blue chips fell 16 percent.

Through Thursday, the Dow lost 2,271 points, suffering its worst seven-day point drop. Its percentage decline of 20.9 percent over that stretch is the largest since the seven-day plunge ending Oct. 26, 1987, when the Dow lost 23.8 percent. That sell-off included Black Monday, the Oct. 19, 1987 market crash that saw the Dow fall 22.6 percent in a single day.

By comparison, during the first week of trading after the Sept. 11, 2001, terror attacks, the Dow lost 1,369.70, or 14.26 percent. But during the eight trading days following the attack, the decline came to 1,038.12, or 10.8 percent, as buyers returned to the market.

The Dow and S&P 500 reached their all-time highs a year ago, on Oct. 9, 2007. Through Thursday, the Dow has lost 5,585 points, or 39.4 percent, since closing at its record of 14,164.53, while the S&P 500, meanwhile, is off 655 points, or 41.9 percent, since recording its high of 1,565.15.

On Friday, about 300 stocks advanced while about 2,900 declined on the New York Stock Exchange, where volume came to a heavy 1.69 billion shares.

Investors continue to shift money into safer investments, most of it going into the government bond market. The yield on the three-month Treasury bill plunged to 0.24 percent from 0.58 percent late Thursday. That suggests that demand for T-bills, regarded by investors as the safest assets around, remains high.

Longer-term Treasury yields moved higher as investors moved into shorter term issues. The yield on the benchmark 10-year note rose to 3.87 percent from 3.76 percent late Thursday.

Gold prices fell $40.60 to $844.90 an ounce on the New York Mercantile Exchange, while oil prices fell declined sharply. A barrel of light, sweet crude fell $8.53 to $78.06 per barrel on the Nymex.

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