MW: U.S. stock indexes turn again, this time downward
President Bush: It will 'take a while' for financial crisis to abate
NEW YORK (MarketWatch) -- The roller-coaster ride in equity markets continued Friday as the major indexes bounced between positive and negative territory, with industrials fronting losses and the energy sector fronting gains.
"Investors are looking for bargains, but selectively focused on those sectors or groups that might be better prepared to weather the credit crisis and subsequent economic slowdown," said Frederick Ruffy, options strategist, WhatsTrading.com.
Stocks had begun the session sharply lower after the U.S. reported new-home building fell to a 17-year low and President Bush discussed efforts to rescue the embattled financial system in the face of global recession.
"Volatility should remain the main feature of Friday trade, whipsawing both bond and stock traders," said analysts at Action Economics.
After lapsing 200 points at the start, The Dow Jones Industrial Average ) was recently down 80.29 points at 8,898.97.
Twenty-three of the blue-chip index components posted losses, led by Citigroup Inc. , off 5.4%.
Gains were led by Merck & Co. Inc. , up 4%.
Losses on the blue-chip index were fronted by Citigroup Inc. , off 5%.
The S&P 500 fell 5.64 points to 940.79, while the Nasdaq Composite declined 5.4 points to 1,712.31.
Energy, health care and consumer staples fronted gains, while industrials and consumer discretionary shares were the hard-hit among the S&P's 10 industry groups.
Oil futures gained, recently up $1.69 at $71.54 a barrel. Read Futures Movers.
Volume on the New York Stock Exchange topped 697 million, and decliners ran just past advancers. On the Nasdaq, 529 million shares traded, and decliners edged ahead of advancers 3 to 2.
Negative bent
U.S. consumer sentiment fell in October, with the University of Michigan/Reuters index falling to 57.5 from a reading of 70.3 in late September, according to reports. See Economic Report.
Before the open, stock futures had extended declines as the Commerce Department estimated housing starts declined 6.3% in September, sinking to their lowest annual rate since January 1991. Read Economic Report.
A measure of consumer sentiment for October was similarly glum.
Despite the negative reaction by equities, Tony Crescenzi, bond market strategist at Miller Tabak & Co., found reason for optimism in the housing data.
"What is sorely needed in the housing market is a decrease in supply, not an increase. The downward trend in completions is good news in terms of the eventual liquidation of the excess housing supply," said Crescenzi.
A different take came from Kevin Giddis, managing director at Morgan Keegan & Co. Inc.
"The drop in housing is not an economic surprise, but when you combine this number, and the depth of its decline, along with the other economic indicators, you have to be concerned," said Giddis.
Investors also weighed the latest comments on the financial crisis offered by Bush, who said it would "take a while" for the credit crunch to ease. Bush also declared the economy would eventually recover in remarks before the U.S. Chamber of Commerce. See details.
Futures had trimmed losses after a further decline in Libor, a key short-term borrowing rate, raising hopes that massive bank bailouts by European and U.S. governments will thaw frozen credit markets.
U.S. stocks closed Thursday with big gains, rallying into the close as bargain hunters stepped in following initial losses on data releases showing drops in factory output. The Dow Jones Industrial Average climbed 401 points, the Nasdaq Composite rose 89 points, and the S&P 500 added 38 points.
The automotive sector was back in the news and on investors' radar screens.
Embattled General Motors Corp. (GM:
6.50, +0.10, +1.6%) and Chrysler LLC are picking up the pace on merger talks, pushed by banks and other lenders eager to see a deal, The Wall Street Journal reported.
Honeywell International Inc. said Friday it anticipates fourth-quarter earnings in the range of 97 cents to $1.01 a share, with analysts polled by FactSet Research looking for, on average, earnings of $1.04 a share.
Sony Ericsson Mobile Communications on Friday reported a smaller-than-expected third-quarter loss, with the phone-making joint venture of Japan's Sony Corp. and Sweden's Ericsson AB affirming its restructuring plan to be on track.
