Bears Keep Firm Grip - TheStreet

Bears Keep Firm Grip

Stocks slide again as a solid GDP number fails to entice buyers.
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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.

Disappointing economic readings and continuing worries about the credit market took New York stocks down during the previous session, with the Dow tumbling 311.50 points, or 2.26%, to 13,473.57. The S&P 500 dropped 35.43 points, or 2.33%, to 1482.66, and the Nasdaq surrendered 48.83 points, or 1.84%, to 2599.34.

Earlier in the day Thursday, the losses had been even worse. At one point, the Dow had a decline of more than 400 points, the S&P had fallen 50, and the Nasdaq plunged over 80.

The two-day decline resulted in the worst week for the major averages since early March. Over the five sessions, the Dow tumbled 4.2%, the S&P 500 slid 4.9%, and the Nasdaq gave back 4.7%.

On the

New York Stock Exchange

4.89 billion shares changed hands, as decliners topped advancers by a 2-to-1 margin. Volume on the Nasdaq reached 2.75 billion shares, with losers outpacing winners 7 to 3.

Markets overseas also lost value. Overnight, Tokyo's Nikkei fell 2.4%, and Hong Kong's Hang Seng declined 2.8%. London's FTSE dropped 0.6%, and Frankfurt's DAX was off 0.8%.

Elsewhere on the economic docket, the University of Michigan said its consumer sentiment index for July was revised to a reading of 90.4, up from June's revised 85.3. The latest reading, however, was below forecasts of 91.5.

Treasury prices rose for a second-straight session, as investors moved into so-called safe havens. The 10-year note was up 1/32 in price, yielding 4.78%, and the 30-year bond was higher by 3/32, yielding 4.94%.

Following the close of the previous session, biotech giant

Amgen

(AMGN) - Get Report

said its second-quarter adjusted earnings expectations surpassed Wall Street's estimates. The new day brought more quarterly reports, among them

Medco

(MHS)

, which topped estimates and lifted its full-year projections.

Oil giant

Chevron

(CVX) - Get Report

posted second-quarter results that topped the Thomson First Call forecast, but the stock shed $2.26, or 2.6%, to end the day at $85.20.

Away from earnings,

Medtronic

(MDT) - Get Report

said it will buy medical-device maker

Kyphon

(KYPH)

in a $3.27 billion deal. Medtronic was off by 11 cents, or 0.2%, at $50.81. Kyphon surged 24.2% to $66.65.

Also, antitrust regulators in Europe are reportedly accusing

Intel

(INTC) - Get Report

of unfair competition against its main microprocessor rival

Advanced Micro Devices

(AMD) - Get Report

and could take action against the company.