- The Washington Times - Tuesday, July 1, 2008

NEW YORK | Wall Street ended a grueling first half quietly Monday, closing mixed as investors again based their trades on what has become the dominant force in the market — the price of oil. The major indexes closed out the first six months of 2008 with double-digit declines, and are perilously close to the levels of a bear market.

This was the worst first half for the Dow Jones Industrials Average since 1970, when the country fell into recession. The more diverse Standard & Poor’s 500 and Nasdaq Composite indexes had their worst first half since 2002, when Wall Street was still suffering through the aftermath of the dot-com bust, the Sept. 11, 2001, terrorist attacks and a recession.

On Monday, stocks pulled back in the early going as oil reached yet another record, this time above $143 a barrel. The market then gathered some strength as crude lost momentum and allowed some investors to consider buying equities that have been turned into bargains by months of volatility.

There is little expectation on Wall Street that the chaos of the first half will soon end. Besides the punishing effect of higher oil, which threatens to stifle consumer spending — and in turn, an economy still struggling to grow — the stock market is still contending with warnings of losses at financial companies, the continuing fallout of the housing slump and the credit crisis that began nearly a year ago.

These problems that show little sign of being resolved soon left Wall Street in tatters as the first half ended. The Dow is down nearly 20 percent from its record high of 14,198.09, set in October, putting the blue chips on the threshold of a bear market.

Financial stocks, which were leading the market higher before the credit crisis struck, ended the half with even steeper losses than anyone expected - just a few months ago, there were predictions that the credit crisis would soon end. Airline stocks have been devastated by the rising price of oil. Detroit automotive stocks, as ever battling competition from overseas makers, are also being pummeled by the sagging economy and higher energy prices.

Investors made relatively small bets ahead of the coming earnings and as the quarter moved toward a close. The Dow rose 3.50, or 0.03 percent, to 11,350.01.

The S&P 500 index rose 1.62, or 0.13 percent, to 1,280.00, and the technology-laden Nasdaq fell 22.65, or 1.21 percent, to 2,292.98.

Since their high point in October, the Dow gave up 19.87 percent; the S&P dropped 18.22 percent; and the Nasdaq is down 19.80 percent. A 20 percent drop from a market peak is considered the start of a bear market — although many analysts say Wall Street already has a bear-market mentality.

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