Losses pile up at US Market

Dow coughs up more than 800 points during the week

US Market registered huge losses during the week that that ended on Friday, 04 October, 2008. The week kicked off with the House of Representatives to voting against the Emergency Economic Stabilization Act of 2008. This shook market sentiments during the beginning of the week. As the week progressed, a number of crucial events happened, namely the Senate's passing of a plan that was revised after the House vote but a batch of notably weak economic data continued to rattle market sentiments.

The Dow Jones Industrial Average lost 817.75 points for the week to end at 11,143.13. Tech - heavy Nasdaq lost 235.95 points at 2,183.34. S&P 500 lost 114 points to end at 1,213.74. The S&P suffered its worst, single day percent drop on Monday, 29 September since the crash of 1987. Specifically, it plummeted 8.8%.

Losses during the first part of the week were compounded by reports of government-led bailouts of financial institutions in Europe and an FDIC-brokered sale of Wachovia's banking operations to Citigroup for just $2.2 billion.

Among economic news during the week at Wall Street, the ISM survey showed that that hit its lowest level since October 2001, an initial jobless claims reading showed that it was at its highest level since September 2001. In addition there was a 4% decline in August factory orders, and a 159K decline in nonfarm payrolls that was the largest since March 2003.

GE announced late in the afternoon on Wednesday, 01 October, that it will raise at least $12 billion in a public common stock offering and is selling $3 billion in preferred stock yielding 10% to Warren Buffett's Berkshire Hathaway. Berkshire will also get $3 billion in warrants, granting the option to purchase GE at $22.25 per share within the next five years. GE's move to shore up investor confidence came after its stock fell as much as 10% earlier in the session.

After a relatively flattish session Wednesday, 1 October, the market suffered another sharp sell-off on Thursday, 02 October as the economic concerns took precedence over news the Senate passed the relief plan by an overwhelming majority, as expected.

On Friday, the Department of Labor announced that nonfarm payrolls were down for the ninth consecutive month. They fell 159,000 in September, exceeding the drop of 105,000 that was widely anticipated. The unemployment rate remained at an elevated 6.1%.

Also, the ISM nonmanufacturing index for September came in at a relatively neutral reading of 50.2. Though it is down a bit from the prior reading of 50.6 and slightly above the consensus reading of 50.0, it indicated steady activity.

The Dow Jones industrial Average ended Friday with a loss of 157 points at 10,325. The Nasdaq Composite Index, finished lower by 29 points at 1,947. S&P 500 finished lower by 15 points at 1,099.

In the currency market on Friday, the dollar clawed back gains it surrendered against major counterparts in the wake of a revised financial-sector bailout plan, but the greenback's upside was capped by U.S. economic fears and expectations of lower U.S. interest rates ahead. The dollar index, which measures the U.S. unit against a basket of six major currencies, was at 80.606. The index was on track to rise 4.6% this week, and was up about 5.0% for the year so far.

Crude-oil futures closed slightly lower on Friday at Nymex, tallying a loss of more than 12% for the week, as traders remained wary about global oil demand. Crude for November delivery closed down 9 cents to close at $93.88 a barrel on the New York Mercantile Exchange. The contract had closed at $106.89 on Nymex a week ago.