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Archive for Saturday, April 16, 2005

Dow plummets on economic fears

Stock markets decline on high oil prices, IBM earnings report

April 16, 2005

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— Wall Street suffered its worst single day in nearly two years Friday, with the Dow Jones industrial average falling 191 points for its third straight triple-digit loss. Deepening concerns over economic growth and higher prices led to the worst week of trading since August.

An already uneasy market began the biggest one-day selloff since May 19, 2003, after the Federal Reserve reported drops in manufacturing and other industrial production, and a Labor Department report showed higher oil costs driving up import prices.

The selloff was bolstered by lower-than-expected profits from IBM Corp., which led to fears that technology spending would be substantially worse than expected this year. Strong earnings from General Electric Co. and Citigroup Inc. were overlooked, but analysts said earnings would nonetheless be a key factor in overcoming the recent slump.

"Earnings are really the only hope for this market," said Brian Pears, head equity trader at Victory Capital Management in Cleveland. "If, on the whole, earnings can go up, then we might be able to overcome oil and inflation and all the other things."

The Dow fell 191.24, or 1.86 percent, to 10,087.51, after falling 125 points Thursday and 104 points Wednesday. The Nasdaq composite index dropped 38.56, or 1.98 percent, to 1,908.15 for its worst showing since Oct. 25. The Standard & Poor's 500 index was down 19.43, or 1.67 percent, at 1,142.62, its lowest level since Nov. 3.

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