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Stocks fluctuate as investors wait for next news on the economy
NEW YORK (AP) ' The stock market went back into a lull Friday as investors waited for the next signals on the economy ' and whether it's headed for another recession.
The major indexes were fluctuating in a narrow range after Thursday's 419-point plunge in the Dow Jones industrial average. There was little news to help investors determine their next moves ' and market analysts said many were taking the day off.
Thursday's plunge followed a stream of disappointing economic news that added to investor concerns that the economy is stalling. The most notable economic news Friday came from JPMorgan Chase & Co. The bank joined other financial firms and cut its forecast for economic growth during the fourth quarter. It's now predicting growth of 1 percent, down from an earlier forecast of 2.5 percent.
The Dow fell 51 points, or 0.4 percent, to 10,939 in early afternoon trading. The Standard & Poor's 500 index fell 2, or 0.2 percent, to 1,138. The Nasdaq composite index less than a point to 2,381.
The Dow's drop was largely due to Hewlett-Packard Co., which plunged 21 percent. The company said Thursday that it will close its mobile business, sell or spin off its PC business and pay $10 billion for a business software company.
Investors weren't, for the moment, seeking the safety of U.S. Treasurys. The yield on the benchmark 10-year Treasury note rose to 2.10 percent from late Thursday's 2.06 percent. It fell below 2 percent Thursday for the first time as heavy demand sent its price sharply higher.
Earlier this week, the market took a pause after the wild swings of the previous week. Economic and corporate news then was more encouraging, including a batch of merger announcements on Monday. Friday's pause seemed to be the result of exhaustion.
"People decided to throw their hands up and go to the beach," said Kim Caughey Forrest, senior equity analyst with Fort Pitt Capital Group in Pittsburgh.
Overseas stock markets had larger drops than in the U.S. European banking stocks fell near two-and-a-half-year lows, dragged down by rumors about banks' potential losses on bonds issued by heavily-indebted governments. The selling in the U.S. has come in part because of fears that U.S. banks would be hurt if European countries default on their debt. Another concern: weakening European economies will hurt growth in the U.S.
Earlier Friday, Asian shares fell sharply, with major indexes in China and Japan losing more than 2.5 percent. However, some of those losses reflected selling in response to the drop in the U.S. Thursday.
As the selling continued overseas, gold rose as high as $1,881 an ounce. Oil prices fell as traders feared a global slowdown that would cut demand for crude.
A possible recession remains the focus of the markets. A recession is traditionally thought of as two consecutive quarters of negative economic growth, measured by a country's gross domestic product. But with expectations of growth in the U.S. already low, investors worry that the economy can't withstand another unexpected event like the earthquake in Japan or the string of bad weather that ravaged the South earlier this year.
JPMorgan analyst Michael Feroli said Friday that business sentiment, household wealth and global growth all look worse than just a few weeks earlier. That will keep economic growth nearly flat in the first quarter of 2012, he said.
On Thursday, economists with Morgan Stanley said that the U.S. and Europe are "dangerously close to recession," adding, "it won't take much in the form of additional shocks to tip the balance."
Stocks also fell Thursday on news of another drop in home sales, weaker manufacturing in the mid-Atlantic states and a jump in inflation at the consumer level to its highest level since March. There also was bad news on the job market: an increase in the number of people who applied for unemployment benefits.
Thursday's numbers joined a series of reports pointing to a slowing economy. The government reported on July 29 that growth in the first half was much weaker than expected ' and that the economy barely grew in the first quarter. Since then, the combination of disappointing numbers in the U.S. and worries about Europe's debt problems have set off waves of selling.
The Dow is down 13.6 percent since stocks began falling on July 21. That has drained billions from American's retirement savings and other investment accounts. And the stock market's drop can itself help move the country toward recession.