Market ends mostly lower after wild session

NEW YORK - The Dow and the S&P 500 dropped for an eighth session on Friday, as a dramatic late-day comeback stalled out to cap the worst week ever for the S&P amid more anxiety about the condition of credit markets and the threat of a global recession.

Even in a market whose recent hallmark has been volatility, Friday's action was exceptional. The Dow lurched back and forth in a 1,000-point range and a late pop in technology shares helped the Nasdaq eke out its first gain of the month. Volume on the New York Stock Exchange was more than double the average of 2008 so far.

But bets that finance chiefs of the world's major economies will take action over the weekend were not enough to keep the Dow and the S&P 500 out of the red. Finance leaders from the world's rich nations pledged a coordinated response to the credit crisis, but stopped short of backing a British plan to guarantee lending between banks.

Shares of Morgan Stanley and Goldman Sachs tumbled after credit ratings service Moody's said it might cut their ratings, reviving concerns about the viability of their banking models.

Energy companies weighed on the market as oil prices fell 10 percent to a 13-month low below $78 a barrel on fear a faltering global economy will cut demand for crude.

The Dow Jones industrial average fell 128.00 points, or 1.49 per cent, to 8,451.19, while the Standard & Poor's 500 Index dropped 10.70 points, or 1.18 per cent, to 899.22. The Nasdaq Composite Index, meanwhile, edged up 4.39 points, or 0.27 per cent, to 1,649.51.

The Chicago Board Options Exchange Volatility Index, Wall Street's fear gauge, hit record highs again on Friday, reflecting unprecedented investor anxiety. The VIX surged 20.4 per cent to a record intraday high at 76.94. By the close, it had given up some gains, but was still up 9.4 per cent at 69.95.

Traders cited margin calls and forced liquidations as a key contributor to the week's sell-off in stocks.

Source: Singapore Business Times - 11 Oct 2008