Stocks Get Spooked
(Updated with investor expectations for coming week.)
NEW YORK ( TheStreet) -- Volatility spiked, and a strengthening dollar, compounded with a soft consumer spending report and sustainability fears, made for a dreary close to the month and what one observer called "a precarious position."
October held true to its reputation as a bad month for stocks: The Dow Jones Industrial Average edged up less than one half of a point; the S&P 500 lost just less than 2%; and the Nasdaq fell 3.6%.
Much of those losses materialized Friday. The Dow lost 249.85 points, or 2.5%, to 9709, while the S&P 500 fell 29.93 points, or 2.8%, to 1036.18. The Nasdaq plunged 52.44 points, or 2.6%, to 2045.11.Perhaps appropriate for the day before Halloween, the CBOE volatility index, considered a reading on fear in the market, rose 24% to above 30. "It tells me we still have a lot of fear and doubt and a continuation of climbing the wall of worry," says Jim Paulsen, chief investment officer, Oaktree Asset Management. But volume is "extraordinarily low," he says, and, "I think it's more traders are moving this around on whatever information they can find to push this thing where they want." For the five-day session, the Dow lost 2.6%, the S&P 500 gave up 4%, and the Nasdaq fell 2.6%. Nonetheless, "I think at the end of the day we've completed another week where the vast majority of the reports on the economy and earnings were better than expected," says Paulsen. "As of now, I don't see that it's any different -- I fail to see why it should roll into something else, when we're turning a corner." With the majority of S&P 500 companies having reported, investors' primary focus is likely to shift from earnings to economic data in the coming week. Among the week's releases will be the government's employment report for October. Vote in TheStreet.com's market poll here.
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