9:16 am - Stocks fall sharply on economic worries

NEW YORK (AP) - Stocks fell sharply Friday after a series of depressingeconomic and corporate reports as well as high oil prices stoked concerns aboutthe health of the economy. The major stock indexes fell more than 2.5 percentand the Dow Jones industrials lost 315 points. Investors were unnerved by disappointing quarterly results from AmericanInternational Group Inc. and Dell Inc. And an index of regional businessactivity that Wall Street regards as a good indicator of a broader report duenext week had its weakest showing in more than six years. Oil prices continued to stir concern about inflation after pushing past $103per barrel for the first time. While stocks made sharp gains in the first three days this week even amidsomewhat lackluster economic readings, the litany of concerns investorssuccumbed to Friday reflected the undercurrent of uncertainty that has kept WallStreet on edge for months. "We really had to face a plethora of negative news," said Art Hogan, chiefmarket strategist at Jefferies & Co. in Boston. "We just ran out of gas thisweek." Hogan said while stocks held up admirably early in the week amid an unevenflow of economic news, they couldn't hold their gains after the latest round ofweak economic signals. The Dow fell 315.79, or 2.51 percent, to 12,266.39. Broader stock indicators also tumbled. The Standard & Poor's 500 index lost37.05, or 2.71 percent, to 1,330.63, and the Nasdaq composite index declined60.09, or 2.58 percent, to 2,271.48. For the week, the Dow lost 0.93 percent, while the S&P 500 gave up 1.66percent and the Nasdaq fell 1.38 percent. The week's losses would have beensteeper had stocks not risen early in the week on hopes many of Wall Street'scredit troubles were easing and after IBM Corp. announced a sizable stockrepurchase plan. Friday's losses sent stocks lower for February, the fourth straight month ofdeclines. Bond prices rose sharply as stocks lost ground. The yield on the benchmark10-year Treasury note, which moves opposite its price, fell to 3.53 percent inlate trading from 3.67 percent late Thursday. The Chicago Board Options Exchange's volatility index, known as the VIX, andoften referred to as the "fear index," jumped 12.8 percent. The dollar hit another low against the euro and slid to a three-year recordagainst the yen. The fall in the dollar has sent prices of commodities such asoil and gold soaring. Light, sweet crude jumped to a record of $103.05 in early electronic tradingbefore settling down 75 cents at $101.84 a barrel on New York MercantileExchange. Insurer AIG announced a $5.29 billion quarterly loss largely because ofsteep declines in the value of a portfolio of contracts known as credit defaultswaps. Such contracts pledge to cover missed payments on debt. The company'slosses caught analysts off guard, as many had expected the company to turn aprofit. While each of the 30 stocks that comprise the Dow industrials showeddeclines, those of AIG were the steepest. The stock fell $3.29, or 6.6 percent,to $46.86. Computer maker Dell posted a 6 percent decline in its quarterly profit,falling below analysts' expectations, and warned that its business could sufferfrom reduced customer spending. Dell slid 97 cents, or 4.7 percent, to $19.90. Bill Schultz, chief investment officer at McQueen, Ball & Associates inBethlehem, Pa., said AIG's report left investors uneasy about the prospect offurther sizable write-downs of bad debt. "Every time we get to a point where we think we've finished, another reportcomes out and says we're not done yet," he said. Schultz expects Wall Street will continue to proceed with "fits and starts"until investors sense that the bad debt from faltering mortgages has beenaccounted for and that balance sheets are on the mend. Some relief for the ailing bond insurance industry is on the way, though thenews didn't dislodge Wall Street's glum mood Friday. Billionaire investor WilburRoss agreed to invest up to $1 billion in Bermuda-based reinsurer AssuredGuaranty Ltd. Assured Guaranty rose $2.87, or 12.6 percent, to $25.65. In economic news, the Chicago purchasing managers index for February came inat 44.5, a weaker reading than the 48.5 that had been expected, according to DowJones Newswires. The report painted a dreary picture of the manufacturing sectorand is seen as a precursor to the national Institute for Supply Managementreport expected Monday. A government report showed that personal spending, when stripping out theeffects of inflation, stood unchanged in January. The findings brought furtherworries that consumers are more hesitant to reach into their wallets amid theuncertainties facing the economy. A parade of economic worries has weighed on consumer as well. TheReuters-University of Michigan final consumer sentiment reading for Februarycame in at 70.8, better than the figure of 69 that had been expected. Still, theindex was well off the level of 78.4 seen in January. Declining issues outnumbered advancers by roughly 7 to 1 on the New YorkStock Exchange, where consolidated volume came to 4.23 billion shares comparedwith 3.76 billion shares traded Thursday. The Russell 2000 index of smaller companies fell 19.54, or 2.77 percent, to686.18. Overseas, Japan's Nikkei stock average closed down 2.32 percent. Britain'sFTSE 100 lost 1.36 percent, Germany's DAX index fell 1.67 percent, and France'sCAC-40 gave up 1.53 percent. ---------- The Dow Jones industrial average ended the week down 114.63, or 0.93percent, at 12,266.39. The Standard & Poor's 500 index finished down 22.48, or1.66 percent, at 1,330.63. The Nasdaq composite index ended the week down 31.87,or 1.38 percent, at 2,271.48. The Russell 2000 index finished the week down 9.25, or 1.33 percent, at686.18. The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted indexthat measures 5,000 U.S. based companies -- ended Friday at 13,455.96, down207.07 points, or 1.52 percent, for the week. A year ago, the index was at14,271.61. Copyright 2007 Associated Press. All rights reserved. This material may not be