8:31 am - Stocks drop as credit woes continue, oil rises

Stocks drop as credit woes continue, oil rises NEW YORK (AP) - Stocks capped a difficult week with steep losses Friday amidescalating worries about the financial and automotive sectors and a rebound inoil prices. The major indexes fell by more than 1 1/2 percent on the day, andthe Dow Jones industrial average gave up more than 200 points to end at itslowest level in three months. While investors have seen other triple-digit days in the past year sinceconcerns about the economy began emerging, the Dow's first finish under 12,000since mid-March could deal Wall Street a psychological blow. An afternoon downgrade of automakers helped draw out sellers in the stockmarket while Treasury prices rose as investors sought the safety of governmentdebt. A Merrill Lynch downgrade of regional banks added to the market's initialanxiety, which ballooned Thursday when Citigroup Inc. warned of significant debtmarkdowns for the second quarter, Washington Mutual Inc. announced 1,200 jobcuts and Moody's Investors Service decided late in the day to downgrade the twobiggest bond insurers. Troubling news about the financial sector piled up all week, sending stocksto steep losses. Early on, the investment banks posted profit declines, FifthThird Bancorp said it need to raise $2 billion in capital and two Bear Stearnshedge fund managers were charged with lying to investors -- causing manyinvestors to flee from stocks. Quincy Krosby, chief investment strategist at The Hartford, said Friday'ssession saw a confluence of the worries that investors have been grappling withas they try to determine where the economy is headed. "I liken it to the GPS system saying 'recalculating,'" she said, referringto the market's uncertainty. "There's no clarity, there's no confidence." Krosby added: "The crosscurrents are coming at a time when the backdrop forthe economy appears to be stabilizing. And yet the headline risk isunrelenting." The headlines Friday helped send the Dow down 220.40, or 1.83 percent, to11,842.69. The blue chips haven't closed below 12,000 since March 17, when themarket was worried about Bear Stearns Cos. collapsing. Friday's pullback leftCoca Cola Co. as the only advancer among the 30 stocks that comprise the Dow. Broader stock indicators also dropped. The Standard & Poor's 500 index fell24.90, or 1.85 percent, to 1,317.93, and the Nasdaq composite index fell 55.97,or 2.27 percent, to 2,406.09. Declining issues outnumbered advancers by about 5 to 1 on the New York StockExchange, where consolidated volume came to a heavy 5.15 billion shares comparedwith 4.44 billion shares traded Thursday. Volume was heavy in part because of"quadruple witching" -- the simultaneous expiration of four types of optionscontracts. For the week, the Dow fell 3.78 percent, the S&P 500 lost 3.1 percent andthe Nasdaq declined 1.97 percent. Bond prices rose Friday as stocks sank. The yield on the benchmark 10-yearTreasury note, which moves opposite its price, fell to 4.17 percent from 4.21percent late Thursday. Concerns over further tensions between Israel and Iran added to investors'worries and pushed oil prices higher. "That introduces dramatic uncertainty," Krosby said of the investors'reaction to unease in the Middle East. Crude oil futures jumped $2.69 to settle at $134.62 a barrel on the New YorkMercantile Exchange, recovering some of Thursday's drop of nearly $5 per barrelon news of a fuel price hike in China. Investors are awaiting the weekend's meeting in Saudi Arabia of oilproducers and consumer nations, which could bring some relief to the problem ofsoaring oil prices. But many analysts believe the gathering might end up being amere finger-pointing session. The concerns made for a difficult market. "There has to be reticence about getting back in," said Stephen Carl,principal and head of equity trading at The Williams Capital Group. "It'sdefinitely an ugly end to the week." Bond insurer MBIA Inc. fell 86 cents, or 13 percent, to $5.59, whilecompetitor Ambac Financial Group Inc. edged up 2 cents to $2.05, after losingtheir "AAA" rating from Moody's. Another ratings move hit stocks of automakers. Standard & Poor's RatingsServices placed the corporate credit ratings of General Motors Corp., Ford MotorCo. and Chrysler LLC on watch with negative implications. The classificationmeans ratings have a one-in-two chance of being downgraded in the next threemonths. S&P believes high fuel costs will hurt the U.S. auto market through2009. GM fell $1, or 6.7 percent, to $13.79, while Ford lost 51 cents, or 8.1percent, to $5.81. The dollar fell against most other major currencies, while gold prices rose. The Russell 2000 index of smaller companies fell 12.10, or 1.64, to 725.73. Overseas, Japan's Nikkei stock average dropped 1.33 percent. Britain's FTSE100 fell 1.53 percent, Germany's DAX index declined 2.12 percent, and France'sCAC-40 fell 1.79 percent. The Dow Jones industrial average ended the week down 464.66, or 3.78percent, at 11,842.69. The Standard & Poor's 500 index finished down 42.10, or3.10 percent, at 1,317.93. The Nasdaq composite index ended the week down 48.41,or 1.97 percent, at 2,406.09. The Russell 2000 index finished the week down 7.88, or 1.07 percent, at725.73. The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted indexthat measures 5,000 U.S. based companies -- ended Friday at 13,415.89, down374.77 points, or 2.70 percent, for the week. A year ago, the index was at15,291.15. Copyright 2008 Associated Press. All rights reserved. This material may not be