Wall Street drops, ends worst week since Au­gust

Kuwait Times - - BUSINESS -

NEW YORK: Wall Street fell sharply on Fri­day and capped off its worst week since the dark days of Au­gust, hurt by a sell­off in tech­nol­ogy com­pa­nies, while depart­ment stores dropped on con­cerns about the up­com­ing hol­i­day shop­ping sea­son.

The three ma­jor in­dexes ended the week down more than 3 per­cent, firmly putting the brakes on a fast rally that be­gan in Oc­to­ber. Dow com­po­nent Cisco dropped 5.8 per­cent af­ter it gave a flimsy forecast, cit­ing a slow­down in or­ders and weak spend­ing out­side the United States.

It was the sec­ond-big­gest drag on the S&P and the Nasdaq and pulled down shares of tech heavy­weights in­clud­ing Ap­ple and Face­book. Re­tail­ers were hit by dis­ap­point­ing re­ports from depart­ment store chains. Nord­strom low­ered its ful­lyear forecast on Thurs­day, spook­ing in­vestors al­ready on edge af­ter Macy’s cut its forecast on Wed­nes­day.

Added to that, data showed US re­tail sales rose less than ex­pected in Oc­to­ber, suggest­ing a slow­down in con­sumer spend­ing. Con­sumer stocks have been a bright spot this year as weak com­mod­ity prices, fears of a global slow­down and the an­tic­i­pa­tion of a US rate hike have hit most stocks, es­pe­cially those of ma­te­ri­als, en­ergy and in­dus­trial com­pa­nies. The S&P 600 small­cap in­dex lost 4.6 per­cent for the week, its worst weekly per­for­mance in over three years.

The un­der­per­for­mance of small­caps rel­a­tive to larger com­pa­nies in re­cent weeks hints at vul­ner­a­bil­ity in the broader mar­ket, said Alan Gayle, se­nior in­vest­ment strate­gist at Ridge­Worth In­vest­ments in At­lanta, which has $50 bil­lion in as­sets un­der man­age­ment.

“The mar­ket got to up within about a per­cent of its pre­vi­ous record high. It got over­bought, but we really didn’t get the fol­low-through we wanted from the small caps,” Gayle said.

The Dow Jones in­dus­trial av­er­age fell 1.16 per­cent to fin­ish at 17,245.24 points and the S&P 500 lost 1.12 per­cent to 2,023.04. The Nasdaq Com­pos­ite dropped 1.54 per­cent to 4,927.88.

All three ma­jor in­dices had their worst week since Au­gust, when fears about the health of China’s econ­omy and stock mar­ket slammed global as­set prices. The Dow lost 3.7 per­cent for the week, the S&P fell 3.6 per­cent and the Nasdaq de­clined 4.3 per­cent.

For 2015, the S&P is now down about 2 per­cent. Nine of the 10 ma­jor S&P sec­tors fin­ished lower on Fri­day, with the con­sumer dis­cre­tionary sec­tor’s 2.65 per­cent fall lead­ing the de­clin­ers. Nord­strom and JC Pen­ney both sank about 15 per­cent.

Fos­sil slumped 36.50 per­cent af­ter the watchmaker said cur­rent-quar­ter sales could fall as much as 16 per­cent. The S&P tech­nol­ogy in­dex fell 2.01 per­cent, with Ap­ple down 2.92 per­cent. Face­book fell 3.77 per­cent, its worst day in over a month.

De­clin­ing is­sues out­num­bered ad­vanc­ing ones on the NYSE by 1,903 to 1,154. On the Nasdaq, 1,761 is­sues fell and 1,027 ad­vanced.

The S&P 500 in­dex showed no new 52week highs and 36 new lows, while the Nasdaq recorded 29 new highs and 181 new lows. About 7.7 bil­lion shares chang­ing hands on US ex­changes, well above the 7.1 bil­lion daily av­er­age for the past 20 trad­ing days, ac­cord­ing to Thom­son Reuters data. — Reuters

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