- Associated Press - Friday, June 10, 2011

The Dow Jones industrial average fell below 12,000 for the first time since March Friday as fears spread that the global economic recovery is losing steam.

The market is on track for its sixth straight weekly loss, which would be the longest weekly losing streak since the fall of 2002. The market’s last seven-week stretch of losses began in May 2001, as the dot-com bubble deflated.

Stocks have suffered this month after weak economic news dampened hopes for a speedy recovery. Traders fear that weaker hiring, industrial output, and a moribund housing market are reversing a bull market that has lifted the Dow 20 percent over the past year.

The Dow has fallen 5 percent since the beginning of June.

Shares bounced back Thursday, breaking their longest daily losing streak in more than a year, after a report that U.S. exports unexpectedly hit a record in April. The gains were short-lived.

The Dow skidded 137 points, or 1.1 percent, to 11.987 in afternoon trading.

The Standard & Poor’s 500 index fell 15, or 1.1 percent, to 1,274. The Nasdaq dropped 31, or 1.2 percent, at 2,654. The Nasdaq has now give up nearly all its gains for the year. The Dow is still up 3.6 percent for 2011, the S&P 1.4 percent.

The losses were broad, with declines across all 10 of the S&P 500’s industry groups. All but two of the 30 companies in the Dow also fell.

Analysts said the pullback reflects traders’ insecurity about the pace of the recovery. However several said it does not signal a longer-term retreat.

“Anyone selling shares today has to be pricing in a recession,” said Jack Ablin, chief investment officer at Harris Private Bank. He said strong corporate earnings and widespread economic growth, however slow, should lead to more gains in the coming months.

“Investors have been waking up on the wrong side of the bed for the last month, so no news is bad news,” Ablin said. He also noted that trading volume was light on a hot, summer Friday as many traders ended their week early. Lighter volume can cause trading to be more volatile.

Ablin suggested that Friday’s losses were driven by the Federal Reserve’s unloading millions in risky mortgage bonds onto the market. As big banks buy those securities, they are offsetting the risk by dumping assets such as stocks and high-yield corporate bonds.

Karyn Cavanaugh, vice president and market strategist with ING Investment Management, also advised investors to stick out the market’s recent turbulence.

“The market doesn’t go up indefinitely; it’s not a straight line and it does get choppy at times,” she said. Cavanaugh said seven straight quarters of stronger-than-expected corporate earnings are a clear signal that the bull market is continuing.

Strong demand from faster-growing economies overseas is offsetting weak consumer spending in the U.S., she said. Consumers account for about 70 percent of U.S. economic activity.

Earlier Friday, a smaller than anticipated Chinese trade surplus in May and a bigger than expected decline in British industrial production in April led to fears that growth is also slowing overseas, not just in the U.S.

Asian markets were mixed after the report showing weak imports to China suggested that demand might decrease for commodities such as oil and iron ore.

Economists fear that Beijing’s efforts to temper rapid growth with lending and investing curbs might cool its economy too quickly. Weakness in China could hurt the global commodities trade if it cuts into demand for oil, iron ore and other industrial inputs for which China is a key customer.

China’s mixed trade report followed surprisingly strong data for U.S. trade that helped lift stocks on Thursday. The government said on Thursday that U.S. exports hit a record in April. Trade factors into the government’s broad calculation of economic growth, known as gross domestic product.

The euro fell below its recent highs on signs that European policymakers have reached an impasse over how to handle Greece’s drawn-out debt crisis.

The yield on the benchmark 10-year Treasury note fell as investors put money into low-risk investments. The yield fell to 2.95 percent Friday afternoon, having traded above 3 percent Thursday as the stock market rallied. Bond yields fall and their prices rise when demand for them increases.

In corporate news, shares of solar chip maker MEMC Electronic Materials Inc. fell 6 percent after an analyst downgraded the stock, saying prices for solar wafers are falling rapidly because of overproduction in China.

Goodyear Tire fell 7 percent, the most in the S&P 500, after the company agreed to sell its Asian wire business to South Korea’s Hyosung Corp. for $50 million. Analysts with J.P. Morgan Chase & Co. said they expect “significantly weaker” demand for replacement tires.