Updated from 4:09 p.m. EDTTech stocks closed sharply lower, as the Nasdaq Composite logged its fifth straight losing session and fell to its lowest levels in six weeks. After trending lower through much of the day, the tech-heavy index pierced its 200-day simple moving average of 1933.65, and finished down 38.63 points, or 1.97%, to 1920.15. The Dow Jones Industrial Average was also dragged down by the Nasdaq's late-day swoon after being positive for most of the session. It finished off 46.70 points, or 0.45%, to 10,225.57, while the S&P 500 was down 6.65 points, or 0.6%, to 1107.24. The 10-year Treasury note traded up 9/32 in price to yield 4.5%, while the dollar was stronger against the yen and about even with the euro. In another day of heavy trading, volume on the New York Stock Exchange exceeded 1.6 billion shares, and decliners led advancers by about 3 to 2. On the Nasdaq, nearly 2.2 billion shares changed hands, and decliners beat advancers by about 7 to 3. "We're testing some pretty key support areas here, and we're not really doing it very successfully," said John Hughes, shortly before the close. "We're going into the weekend, and we have all these geopolitical concerns here, so that's what's adding to the selling this afternoon. There was really no rally today, we haven't been able to lift them, we haven't been able to hold, so everyone's just bailing out here, I think. "From a technical standpoint, that break in the 200-day moving average on the Nasdaq is a big negative," he added. "There's no two ways about it." All the indices are now close to flirting with their lowest closing levels of the year, set in late March, which were thought to be the bottom of a long-awaited correction in the bull market. Those lows are considered major support levels in a trading range that is more than a month old. For the Dow, that low is about 10,048, while the Nasdaq's is 1902 and the S&P's is 1108.
The Dow had its second losing week in a row, off 2.4%. The Nasdaq shed 6.3% for the week, while the S&P was off 2.9%. For April, all indices suffered their third losing month in a row. The Dow lost almost 1.3%, the Nasdaq shed 3.7% and the S&P was off almost 1.7%. Mark Arbeter, chief technical analyst at Standard and Poor's, said the jump in trading volumes this week, specifically on Wednesday and Thursday, raised the probability that the major stock indices will undercut their 2004 lows set in late March. "What you want to see in a retest of lows is a decrease in volume, not a pickup in volume," he said. "This pickup in volume suggests clearly that institutions have stepped up their selling and are moving out of the stock market. That's not a good sign." Thursday's volume on the Nasdaq was the highest recorded since late January, and Wednesday and Thursday were the third- and fourth-highest volume sessions of the year on the New York Stock Exchange. Arbeter said that if March lows are broken, the potential move for the S&P would be down to the 1000 to 1050 level, with 1700 to 1800 a possibility for the Nasdaq. "I don't think we're in danger of moving back into the primary bearish trend," he added. "I just think we're going to make another primary low here on this move." However, other analysts continued to see the decline as a buying opportunity. "The fundamentals continue to be pretty favorable here," said Dave Briggs, head of equity trading at Federated. "I view stocks as the investment vehicle of preference vs. fixed income right now, so I think it's a little too soon to throw in the towel on the market yet."
The government's measure of personal income met Wall Street's expectations for the month of March, rising 0.4% compared with an upwardly revised 0.5% figure recorded for February. Meanwhile, personal spending matched February's revised rate, also 0.4%, but came in short of the consensus estimate of 0.7%. Separately, the final University of Michigan sentiment index for April advanced a point to 94.2, narrowly beating expectations, while the Chicago PMI Index for the month came in at 63.9, ahead of the consensus estimate for 61.0. In other news, Iraqi security forces commanded by a veteran of Saddam Hussein's Republican Guard took over positions around the Iraqi city of Fallujah from U.S. Marines on Friday, according to the Associated Press. Two Marines were killed and six wounded in the morning in a suicide car bombing near their camp there. In stock news, shares of Foundry ( FDRY) closed down $2.85, or 20.1%, at $11.30 after the maker of telecom equipment posted a weak first quarter and trimmed second-quarter guidance late Thursday. The company earned $19.9 million, or 14 cents a share, up from the year-ago $13.4 million, or 11 cents a share. Analysts were expecting earnings of 17 cents a share. Foundry weighed heavily on the Amex Network Index, down 3.6%, and was a main drag on the Nasdaq. Its peer, Cisco ( CSCO), the Nasdaq's most-active stock Friday, saw its shares close down $1, or 4.6%, to $20.91. Consumer products giant Procter & Gamble ( PG) said third-quarter profit rose to $1.09 a share from 91 cents a share last year on a 22% revenue jump. Earnings in the most recent quarter beat the analyst estimate by a nickel. Its shares finished down 22 cents, or 0.2%, to $105.75. Biogen-Idec ( BIIB) posted a first-quarter loss of $41.2 million, or 12 cents a share, thanks to a merger-related charge. Revenue rose 24% to $542 million. Excluding the charge, the company earned 40 cents a share, 6 cents better than forecasts. It shares closed up $1.99, or 3.5%, to $59.
Oil exploration company Anadarko Petroleum ( APC) earned $392 million, or $1.55 a share, in the first quarter, compared to $418 million, or $1.63 million, last year. Revenue jumped 16% to $1.46 billion. Excluding a charge, the company earned $1.70 a share, 33 cents better than estimates. Its shares closed up 68 cents, or 1.3%, to $53.58. Also, Cigna ( CI) reported first-quarter operating income of $1.86 a share, 2 cents above analysts' forecasts. Revenues, however, dropped to $4.722 billion from $4.9 billion a year ago, and its GAAP earnings plunged 67% after one-time charges. Its stock closed down 31 cents, or 0.5%, to $64.51. ChevronTexaco ( CVX) reported a 33% jump in earnings. The petroleum exploration and development company reported profits of $2.56 billion, or $2.40 a share, up from last year's $1.92 billion, or $1.81 a share. Its shares closed up $1.15, or 1.3%, at $91.50. Overseas markets closed lower, with London's FTSE 100 down 0.7% to 4490 and Germany's Xetra DAX down 0.6% to 3985. In Asia, Japan's Nikkei tumbled 2% to 11,762 and Hong Kong's Hang Seng fell 0.5% to 11,943. Next week, earnings season finally begins to wind down. Fewer than 20 companies are scheduled to release first-quarter results before Monday's open, including Tyson Foods ( TSN), AmerisourceBergen ( ABC), Humana ( HUM), John Hancock ( JHF) and Lear ( LEA). Economics will be in focus, with a Federal Open Market Committee meeting slated for Tuesday morning, with investors looking for signals from the Fed about inflation and rising interest rates. On Friday, April's employment report is due out. Economists expect nonfarm payrolls to add 175,000 new jobs, down from the 308,000 recorded in March. The unemployment rate is expected to stay put at 5.7%. At 10 a.m. EDT on Monday, a report on construction spending in March is expected to show a 0.4% increase, up from February's decrease of 0.1%, and the Institute for Supply Management will release the April results of its manufacturing index. Economists expect the index to rise slightly from 62.5 to 62.7. Also, April's automobile and truck sales data is due out some time Monday.