NEW YORK Wall Street ended a depressing week with another big loss on Friday, with the Dow Jones industrials falling more than 100 points amid ever-escalating worries about high oil prices and fallout from the credit crisis. The major indexes all all down more than 3 percent for the week.
The Dow has fallen nearly 460 points in the last two days and reached its lowest point since September 2006.
Investors again contended Friday with a seemingly relentless stream of troubling news about the financial sector. Moody's Investors Service said it is reviewing investment bank Morgan Stanley for a possible downgrade. There were also more reports that Merrill Lynch & Co. might have to write off nearly $6 billion of risky mortgage-backed debt.
In addition to anxiety about the financials, the market watched oil's march higher the price of crude rose to a new record of $142.99 a barrel on the New York Mercantile Exchange. Wall Street remains concerned that higher commodity prices will slam consumers with not only elevated costs for energy and food, but also for other goods if cash-strapped companies decide to pass along the rising costs.
"People are trading with a lot of emotion," said Alexander Paris, an economist and market analyst for Chicago-based Barrington Research. "I think the market is trying to make a bottom, but the question is will it hold there or just crash through. It feels just like the top of the technology bubble in 2000, you know there's something wrong but it is hard to time it."
Investors got little solace from economic data released on Friday. The Commerce Department said spending rose 0.8 percent in May, as taxpayers started receiving their stimulus checks. The increase was higher than the 0.7 percent economists predicted. The report also said personal incomes surged 1.9 percentsignificantly more than anticipated. After taxes, incomes surged 5.7 percent, the largest amount in 33 years.
According to preliminary calculations, the Dow Jones industrial average fell 106.91, or 0.93 percent, to 11,346.51, compounding Thursday's 358-point skid. The blue chip index is down 19.9 percent from its record high close of 14,164.53 in October, and is on the verge of the 20 percent pullback that is considered the threshold for a bear market.
Broader stock indicators also closed lower. The Standard & Poor's 500 index fell 4.77, or 0.37 percent, to 1,278.38. The S&P, the index most closely watched by market professionals, is down 18.3 percent from its October high.
The Nasdaq composite index fell 5.74, or 0.25 percent, to 2,315.63.
For the week, the Dow gave up 4.19 percent, the S&P shed 3 percent and the Nasdaq fell 3.76 percent.
Declining issues outnumbered advancers by about 3 to 2 Friday on the New York Stock Exchange, where volume came to 1.4 billion shares.
Bond prices edged higher. The yield on the benchmark 10-year Treasury note, which tends to move opposite its price, was at 3.96 percent, down from 4.03 percent late Thursday. The dollar was lower against other major currencies, while gold prices rose.
In other economic news, the University of Michigan's June index of consumer sentiment came in at 56.4, a bit lower than its reading in May and slightly below the average analyst estimate.
"The problem is that there's not one, single worry," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. He pointed to high gas prices, still-tight credit market conditions, and the contracting housing market. "If you're looking for problems that face investors, that face the U.S. economy, they're everywhere."
Thursday's drop came on a combination of worries about oil prices and the financial, automotive and technology sectors. General Motors Corp. shares dropped to their lowest level in more than three decades.
GM shares rose 12 cents to $11.55 on Friday.
Also Friday, a Lehman Brothers analyst lifted his prediction of Merrill Lynch's asset markdowns in the second quarter. His write-down estimate rose to $5.4 billion from $3 billion. On Thursday, a Goldman Sachs analyst forecast a $4.2 billion write-down at Merrill and a nearly $9 billion write-down at Citigroup Inc.
Merrill shares fell 35 cents to $32.70, and Citigroup shares fell 42 cents, or 2.3 percent, to $17.25.
Morgan Stanley dropped 12 cents to $36.71 after Moody's said the investment bank's "financial performance and risk management has been inconsistent" since credit markets began last year. The company will focus its review on Morgan Stanley's ability to control risk and generate profit over the next one to two years a period Moody's expects will be challenging for investment banks.
The Russell 2000 index of smaller companies fell 0.28, or 0.04 percent, to 698.14.
Overseas, Japan's Nikkei stock average fell 2.01 percent after Wall Street's tumble. In afternoon trading, Britain's FTSE 100 rose 0.21 percent, Germany's DAX index fell 0.58 percent, and France's CAC-40 lost 0.65 percent.