Wall Street retreats, but avoids bloodbath

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UPDATE:

Wall Streets stocks staged another broad retreat Friday, but traders and analysts said fears of an even bigger sell-off failed to materialize amid a rare bit of hopeful news about the U.S. housing market and falling prices for oil and other commodities.

The Dow Jones Industrial Average of 30 top stocks marked the 79th anniversary of 1929’s “Black Thursday” with a loss of 312.3 points (3.6 percent) to 8,378.95, while the broader Standard & Poor’s index of 500 stocks slid 31.35 points (3.5 percent) to 876.76, recovering from a nearly 6 percent drop earlier in the day.

But the losses on Wall Street were below what future markets had predicted following a much sharper decline in Asian and European markets earlier in the day.

The economic omens had been so bad that the New York Stock Exchange was forced to deny rumors the opening bell would be delayed and also said it was prepared to employed its so-called “circuit-breakers” — temporarily suspending trading if the Dow lost more than 1,100 points — with “fervent hope we won’t need them.”

“It’s a pathetic moral victory, but the fact that we’re not down 1,000 points is telling me the market’s sensing value,” John Lynch, a market analyst for North Carolina-based Evergreen Investments, told Bloomberg News.

The news, for once, wasn’t all bad.

The National Association of Realtors Friday said that sales of existing homes in the United States were up 5.5 percent in September, the biggest monthly increase in five years and a sign that a bottom may have be in sight for the battered U.S. housing market. But median sales prices continued to fall to $191,600, down 9 percent from a year ago.

Oil and other commodity prices were down sharply again yesterday. Oil fell nearly $5 a barrel in early trading on the New York Mercantile Exchange to $63 a barrel, despite the announcement by the OPEC producers cartel that they would cut production quotas by 1.5 million barrels a day next month. The price of a barrel of oil has fallen by more than half since mid-summer.

Global markets had already put a quick halt to Thursday’s modest stock rally before trading in the United Stats even began.

Japan’s Nikkei index lost 9.6 percent, hurt in part by the news that auto giant Toyota suffered its first quarterly drop in sales in seven years. Britain’s FTSE 100 Index fell 6.9 percent as the government announced an 0.5 percent drop in GDP for the third quarter of 2008 — the first fall in growth in 16 years.

The bleak British growth numbers pushed the pound below $1.53, the biggest drop in 37 years.

Exchanges in Germany and France suffered comparable losses, while Moscow’s battered exchange fell another 14 percent as authorities announced a trading halt through Tuesday. The MSCI index of 25 emerging markets also was off more than 8 percent.

White House spokeswoman Dana Perino hailed the new housing data.

“We’re not out of the woods yet by any means,” she said, “when it comes to falling house prices and our fundamental problem of an oversupply of houses. But we’re getting nearer to the bottom every day.”

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About the Author
David R. Sands

David R. Sands

Raised in Northern Virginia, David R. Sands received an undergraduate degree from the University of Virginia and a master’s degree from the Fletcher School of Law and Diplomacy at Tufts University. He worked as a reporter for several Washington-area business publications before joining The Washington Times.

At The Times, Mr. Sands has covered numerous beats, including international trade, banking, politics ...

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