Bears Keep Firm Grip
07/27/07 - 04:40 PM EDT
Robert Holmes
Updated from 4:05 p.m. EDT
Stocks in the U.S. struggled for most of the session Friday, and a late acceleration in the rate of selling meant another round of steep losses for the market. The Dow Jones Industrial Average dropped 208.10 points, or 1.54%, to 13,265.47, bringing the two-day decline to 519 points. The S&P 500 fell 23.71 points, or 1.60%, to 1458.95. The Nasdaq Composite tumbled 37.10 points, or 1.43%, to 2562.24. "This was an ugly finish, and Monday morning might not be better," said Paul Nolte, director of investments with Hinsdale Associates. "The fact that we sold heavily at the end and finished on our lows shows that no one wanted to carry anything over the weekend. Instead of 'Merger Monday,' there are fears that finance issues will bring 'Break-up Monday.'" Buyers weren't enticed by the latest report on U.S. gross domestic product, which showed that the economy grew at a 3.4% pace in the second quarter. That narrowly topped expectations for 3.2% growth. First-quarter GDP, however, was revised to 0.6% from 0.7%. Ian Shepherdson, chief economist with High Frequency Economics, argued that "trade will continue to improve, thanks to the weak dollar and soft domestic demand, but not at this pace. The relative strength of the labor market is now even more of a mystery. Despite consumption slowing to just 1.3% from 3.7%, growth was boosted by foreign trade, which added 1.2 percentage points to growth." Meanwhile, a near-record close for crude further exacerbated buyers' fears. The front-month September crude contract surged $2.07 to close at $77.02 a barrel, just a penny shy of its all-time closing high.
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