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Wall Street Takes A Beating

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By TIM PARADIS

The Associated Press

Published: February 21, 2009

NEW YORK - Despairing investors keep unloading stocks, and there are no signs that the selling will end anytime soon.

Wall Street tumbled again Friday, giving the market a painful end to another terrible week, one that left the major indexes down more than 6 percent. The reality of a protracted recession, and the likelihood that government intervention can do little to hasten its end, again had investors abandoning stocks, particularly those of struggling financial companies.

Friday's drop, which shaved 100 points off the Dow Jones industrial average, was led by financial stocks and came a day after the market's best-known indicator dropped to its lowest level since the depths of the last bear market, in 2002. And the Standard & Poor's 500 index, the barometer most closely watched by market pros, came close to its lowest point in nearly 12 years.

Wall Street has been sinking lower and lower as investors come to terms with the fact that the optimism that fed a late-2008 rally clearly was unfounded. Companies' forecasts for this year, which accompanied a dismal series of fourth-quarter earnings reports, pounded home the fact that no one can figure out when the recession will end.

"It was a market that was built on that hope, and what we're seeing now is an unwinding of that," said Todd Salamone, director of trading and vice president of research at Schaeffer's Investment Research in Cincinnati, speaking of the rally from late November to early January.

The disappointment seen this week grew out of the market's growing recognition that the multibillion dollar stimulus package and bailout program put together by the Obama administration are not likely to turn the economy around for some time.

"There were a lot of people that were banking on Washington to get us out of this. I don't know if there is anything Washington can do," Salamone said. He said the global economy is going through the tedious process of reducing borrowing and working through bad debt, something that government help can't speed up.

With the week erasing whatever shreds of hope the market had, there is virtually no chance of a rally on Wall Street. What the market might see is a blip upward, but blips tend to evaporate quickly.

The Dow industrials fell 100.28, or 1.3 percent, to 7,365.67 after falling earlier more than 215. On Thursday, the Dow broke through its Nov. 20 low of 7,552.29 and closed at its lowest level since Oct. 9, 2002.

The Dow's 6.2 percent slide for the week was its worst since the week of Oct. 10, when it lost 18.2 percent.

The Standard & Poor's 500 index on Friday fell 8.89, or 1.14 percent, to 770.05. The benchmark most watched by traders came within less than 2 points of its Nov. 20 close of 752.44. It remains above its Nov. 21 trading low of 741.02.

The Nasdaq composite index fell 1.59, or 0.11 percent, to 1,441.23.

For the week, the S&P fell 6.9 percent and the Nasdaq lost 6.1 percent.

Declining issues outnumbered advancers by about 3-to-1 on the New York Stock Exchange, where volume came to 2.12 billion shares.

The Russell 2000 index of smaller companies fell 5.75, or 1.38 percent, to 410.96.

Shares of financial bellwethers Citigroup and Bank of America plunged on worries the government will have to take control of them.

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