NEW YORK (MarketWatch) — Investors will turn their attention next week to economic data and the possibility of further intervention by U.S. and foreign leaders as woes pile up for the American auto industry at home and many industries around the globe.
Wall Street saw more heavy losses over the past week as increasingly dire economic reports and corporate outlooks confirmed that the global economic slump is now hitting most industries.
“Investors channeled their nervous energy away from the credit markets and are now obsessing over the direction of the economy,” said Jack Ablin, chief investment strategist at Harris Bank. “Unfortunately, most of their fears are being realized, as economic arrows point lower.”
The Dow Jones Industrial Average ($INDU) fell 337 points to end at 8,497 on Friday, leaving it down 5% for the week.
The broad S&P 500 index ($SPX) fell 38 points to 873 Friday, ending the week 6.2% lower. Hopes about consumer spending faded after a steeper than expected 2.8% drop in retail sales in October, weak outlooks from Best Buy (BBY) and JC Penney (JCP) while Circuit City filed for bankruptcy.
Besides retail sales, there were little key U.S. economic data. But on Friday, the eurozone officially entered into its first recession since the single currency was launched nearly 10 years ago. See full story.
The Nasdaq Composite (COMP) fell 79 points to 1,516, after a stiff 7.9% drop over the past week. Technology issues were hit after dire outlooks from chipmaker Intel (INTC) , computer-maker Dell, cellphone maker Nokia (NOK) and Sun Microsystems (JAVA) .
“Corporate earnings are also weighing on equities,” Ablin said.
Third-quarter earnings at S&P 500 companies are now expected to be down 18.4% from a year ago, compared with expectations for a drop of 13% just last week, according to Thomson Financial.
And expectations for the fourth quarter continue to be revised lower. As financial firms began reporting huge write downs late last year, comparisons with this quarter are easier, with and analysts on average forecasts earnings to have grown 20.6%. But that’s still down from 24% just last week, and excluding financials, earnings are expected to fall 4.6% year on year.
