Wall Street was grumpy when it returned from its summer vacation on Tuesday. After a moody week, it's still not happy to be back.
In a four-day week shortened by the Labor Day holiday, all the major indexes fell for the second-straight week. The
closed Friday at 8,427.20, down 2.7% for the week; the
, at 1,295.30, gave up 1.5%, and the
headed home for the weekend at 893.92, down 2.4%.
The market got off on the wrong foot bright and early Tuesday morning and never quite regained its step, despite green-number days Wednesday and Friday. Tripping it up was
, reeling from an analyst's downgrade and continuing concern over potential liabilities it faces from investigations into various business practices, such as IPO allocations at its Salomon Smith Barney unit.
"We had that steep selloff Tuesday," says Todd Clark, managing director of listed trading for Wells Fargo Securities. "We weren't able to recover."
In a likely reflection of pre-Sept. 11 jitters, activity remained relatively light compared with the end-of-summer volume vacation. Last year, average daily volume on the
during Labor Day week -- the week prior to the terrorist attacks -- jumped 37% from the average volume of the prior week that year, the last week of August. This week's trading, however, was up only 16% from last week's levels.
"I think we're going to have a pretty nervous week next week," says Clark. "I think that's going to keep volumes low."
Tuesday's debacle, which lopped 4.1% off the Dow, was followed by a partial bounceback Wednesday, thanks to such springboards as strong auto-sales reports for July -- a sign of continuing consumer strength -- and a construction spending report that was better than expectations, both for July and in a June revision. Another consumer tell, homebuilder
, reported better-than-expected results and raised guidance.
On Thursday, though, the market lost its footing again, thanks to worrisome consumer-related reports and other numbers. August same-store sales at numerous retailers were weak, while initial jobless claims came in higher than expected and earlier numbers were revised upward. The Institute for Supply Management's nonmanufacturing index came in below expectations, sinking to its lowest level since January.
If Citigroup was the stock that characterized the beginning of the week,
was the bellwether of the end. The saga began Wednesday morning, when Merrill Lynch and Credit Suisse First Boston cut earnings forecasts for the chipmaker as a prelude to Intel's scheduled Thursday afternoon midquarter update. Despite a positive day on Wednesday, Intel went into the call down more than 9% for the week.
Then -- voila! -- good news for Intel. Or better-than-expected news, at least. The company didn't whiff on the guidance, as some had feared; rather, it said the quarter's revenues would come in slightly below the midpoint of its previous forecast. On Friday, that was enough to send Intel back up more than 7%.
A final piece of good news came in on Friday to close the week on an up note: August's unemployment report, which fell to 5.7% instead of rising, as reasonable people believed it would, from 5.9% in July to 6%.
So what happened Friday with Intel and the unemployment numbers? Tony Dwyer, chief market strategist for Kirlin Securities, says you have to remember we're in a secular bear market, in contrast to the bull market of the past few years. In a bull market, you buy on the rumor and sell on the news, says Dwyer. In a bear market, though, you sell on the rumor and buy on the news. "We're in the opposite image of where we were in the 1990s," he says.