Stocks were skidding along a broad front Friday amid a fresh barrage of bad news for Wall Street. New worries emerged in the credit mess as Wachovia (WB) said it will raise its loan allocation by $600 million, and British giant Barclays (BCS) refused to say if it will have a derivatives loss. The tech sector, stung by a downbeat report from Cisco (CSCO) late Wednesday, had to contend with another disappointment as Qualcomm (QCOM) cut its annual forecast.
Data on import prices and consumer sentiment were also discouraging, outweighing a small decline in the U.S. trade deficit. Bonds were higher in a flight to safety amid speculation the Federal Reserve will have to cut rates soon.
In early trading Friday, the Dow Jones industrial average was down 147.06 points, or 1.11%, to 13,119.23. The broader S&P 500 fell 13.73 points, or 0.93%, to 1,461.04. Once again, the tech-heavy Nasdaq composite index was the weakest performer among the major stock market benchmarks, dropping 47.37 points, or 1.76%, to 2,648.63.
Once again, activity in the broader market was resoundingly negative. On the NYSE, 26 shares declined in price for every three that advanced. Nasdaq breadth was 20-5 negative.
Investors were not reassured by news from Barclays early Friday. Yes, the giant British bank said there was "no substance" to rumors of a $10 billion write-down. But when asked if the company was preparing for a significant write-down, executives reportedly said "no comment." The stock plunged in British trading.
In economic news Friday, the U.S. trade deficit narrowed to $56.5 billion in September, from $56.8 billion in August. Imports are up 4.9% from a year ago, while exports are up 13.6% year-over-year. The trade deficit with China widened to $23.8 billion. The data suggests economic growth figures for the third quarter will be revised higher, Action Economic says.
U.S. import prices jumped 1.8% in October, more than expected, while export prices were up 0.9%. The data may "fuel fears of stagflation," Action Economics says. Stone & McCarthy Research says much of the big increase can be attributed to the rise in the price of oil.
Also worrisome was a widely followed report on the mood of the consumer. The University of Michigan consumer sentiment index fell to 75.0 in October from 80.9 in September.
On Friday, oil prices continued their volatile ways as crude continued just below the symbolic $100 per barrel mark. December NYMEX crude initially declined modestly, then traded higher at $95.47 per barrel.
Among stocks in the news Friday, Wachovia says that, due to market deterioration, credit instruments in its portfolio lost another $1.1 billion in value in October. Also, the bank expects to record an extra $500 to $600 million in loan loss provisions in its fourth quarter.
Qualcomm reported earnings of 67 cents per share, vs. 36 cents a year ago as revenue rose 15%. Investors were disappointed by lower-than-expected predictions for 2008 earnings.
Fannie Mae (FNM) shares slid Friday after the mortgage giant reported earnings per share of $1.17 for the first three quarters of 2007, vs. $3.16 for the corresponding year-ago period. The company expects market forces that affected results in its first three quarters to continue through end of the year.
Priceline.com (PCLN) reported earnings of $1.58 per share, vs. 72 cents a year ago as revenue shot up 34%. Research analysts at Piper Jaffray raised their earnings estimates and target price for the company.
Merck & Co. (MRK) agreed to pay $4.85 billion into a settlement fund to deal with lawsuits from its Vioxx product.
Leap Wireless (LEAP) says it must restate financial results from 2004 through the first half of 2007 to correct errors.
Estee Lauder Companies (EL) raised its dividend 10% and said it would buy back another 20 million shares. A Bear Stearns analyst reportedly upgraded the stock to outperform from peer perform.
European equity indexes were lower on Friday. In London, the FTSE 100 index lost 1.33% to 6,297.30. Germany's DAX index fell 0.03% to 7,817.11. In Paris, the CAC 40 index declined 1.51% to 5,546.70.
Asian markets were mixed. In Japan, the Nikkei 225 index fell 1.19% to 15,583.42 after losses of 2% the day before. In Hong Kong, the Hang Seng index edged up 0.08% to 28,783.41. The Shanghai composite index lost 0.27% to 5,315.54.
Treasury Market
Treasury prices were rising on Friday. The 10-year Treasury note was higher at 100-02/32 for a yield of 4.250%, while the 30-year bond was higher at 105-28/32 for a yield of 4.636%.