NEW YORK (CNNfn) - U.S. stocks plummeted Friday, capping off five days of stunning losses that handed the Nasdaq composite index its worst weekly performance of all time and the Dow Jones industrial average its steepest one-session point loss in history.|
The Dow tumbled more than 600 points, trouncing the previous record and triggering circuit breakers at the New York Stock Exchange. The sell-off gave the Nasdaq its biggest point loss of all time, topping the last No. 1 plunge set just five days ago.
But the statistical standout could be this: the Nasdaq fell more than 25 percent this week, trouncing the 19 percent fall that began Oct. 21, 1987, Black Monday.
Friday's plunge came after the government said prices at the consumer level showed surprising strength last month, triggering fears that the Federal Reserve may raise interest rates more aggressively.
The Nasdaq composite index shed 355.61 points, or over 9 percent, to 3,321.17, its biggest one-day decline on record. At one point during the trading session, the Nasdaq was down 411 points. The index lost over 1,000 points this week and is now off more than 34 percent from its record high set March 10 - well beyond the 20 percent decline Wall Street sees as the beginning of a bear market.
Meanwhile, the Dow Jones industrial average skidded 616.23 points to 10,307.32, off over 5 percent, but an improvement from its 722-point drop in the last hour of trading. The broader S&P 500 index fell 83.20 to 1,357.31.
"They're selling the good with the bad because they can. They're throwing everything out the window and that's irrational," Brian Finnerty, head of Nasdaq stock trading at C.E Unterberg Towbin, told CNN's Street Sweep. "But that's also when a bottom is formed."
Still, analysts say little fresh fundamental news was behind the week's losses. Instead, months of greed that fueled one of the greatest bull markets in history turned to fear on changing sentiment that the highest flying technology stocks rose too far, too fast.
Gail Dudack, market strategist at Warburg Dillon Read, told CNN's Street Sweep that some of the losses could be linked to investors who, faced with losses, sold stocks to meet their brokers' margin account requirements. (392K AIFF) (392K WAV)
As investors dump overpriced stocks to either meet margin calls or take profits before the highflying technology leaders plummet any farther, bargain hunting may be on the horizon.
"I think you'll see healthier and broader advances in the market. Now is the time for optimism," said Bill Meehan, chief market analyst with Cantor Fitzgerald.
Decliners outpaced advancers on the New York Stock Exchange 2,702 to 386 as more than 1.1 billion shares changed hands. Losers beat winners on the Nasdaq 4,018 to 511 on volume of more than 2.4 billion shares.
The dollar weakened against the euro and the yen. Treasury securities edged lower.
Economic data sparks sell-off
Analysts said a move by the Federal Reserve to aggressively implement rate hikes could strengthen inflationary fears in an already unnerved market. The Federal Reserve has raised interest rates five times since last June -- each time just a quarter point -- bringing its benchmark Fed funds lending rate to 6 percent.
Aggressive sell-offs on the Nasdaq had attracted buyers over the past few months but pervasive nervousness has sent investors running for the sidelines. So far in April, they have sold into any strength and refused to buy on the dips.
"The question becomes, when exactly does the U.S. have an inflationary market," Jim Bianco, president and research director of BiancoResearch.com, told CNNfn's Before Hours. "We've got almost a nine-year high in the inflationary market."
In Friday's major economic indicator, consumer prices jumped 0.7 percent in March, or 0.4 percent excluding often-volatile food and energy prices, according to the Commerce Department. The overall rise was the biggest since April 1999 and exceeded Wall Street forecasts.
Strong earnings not enough to attract buyers
Bank stocks, which rallied earlier in the week after some strong earnings reports, were among the biggest losers. J.P. Morgan (JPM: Research, Estimates) slid 9-7/16 to 122-1/16, Citigroup (C: Research, Estimates) lost 4-13/16 to 57-3/4, and American Express (AXP: Research, Estimates) dropped 12-1/4 to 133-3/4.
Solid earnings have lifted individual stocks, but failed to support entire sectors, causing wild sell-offs instead of attracting a surge of bargain hunters. "One stock's good earnings isn't going to be enough to save the day," Larry Wachtel, market analyst with Prudential Securities, told CNNfn's market coverage.
Sun Microsystems (SUNW: Research, Estimates) rose 1/4 to 78 after reporting third-quarter earnings that rose 44 percent to 26 cents a share, up from the year-ago's 18 cents, and exceeding the expected 23 cents.
But other technology leaders didn't benefit from Sun's positive results. Cisco Systems (CSCO: Research, Estimates) fell 4-1/8 to 57, Dell (DELL: Research, Estimates) dropped 4-1/16 to 47-5/8, and Oracle (ORCL: Research, Estimates) shed 9-7/16 at 62-1/2.
Still, Peter Cardillo, director of research at Westfalia Investments, said the worst may be over. (229K WAV) (229K AIFF).
(click here for a comprehensive look at the day's corporate earnings)