Stock prices suffered their hardest fall in more than two years Friday -- with the Dow Jones industrials plunging more than 190 points -- as evidence mounted that the U.S. economy's once-robust growth is slowing.
Even another drop in oil prices, to nearly $50 a barrel, couldn't ease the malaise on Wall Street amid a growing debate over whether the economy is merely hitting a soft patch or is at risk of a more serious pullback.
Either way, "investors are in a lousy state of mind," said Al Goldman, chief market strategist at investment firm A.G. Edwards & Sons Inc. in St. Louis. Another sharp downturn Monday could put the Dow Jones industrial average below the 10,000 mark.
Friday's retreat was partly a reaction to disappointing profit at IBM Corp. and a slump in consumer sentiment, as reported by a widely watched survey.
But the sell-off began Wednesday, triggered by data signaling that the stout economic growth of the last two years had slowed, hobbled in part by high energy prices. Reports on retail sales and industrial production both failed to meet expectations this week.
"This suggests an economy that is rapidly losing steam," Kathy Bostjancic, senior economist at Merrill Lynch & Co., said Friday in a note to clients.
The Dow plummeted 191.24 points to 10,087.51, its steepest daily drop since March 24, 2003, and its third straight decline of 100 points or more -- the first time that's happened since January 2003.
That gave the blue-chip index a loss for the week of nearly 374 points, or 3.6%, its worst weekly showing in more than two years, and dropped the average to its lowest level since election day on Nov. 2. Broader market indexes also suffered sharp declines.
Some analysts said Wall Street was overreacting, contending that the economy wasn't in danger of falling into recession and in fact was continuing to expand at a respectable pace.
Anthony Chan, senior economist with J.P. Morgan Asset Management, said the markets had shifted in a matter of months from believing that the economy was overheating to fearing that it would plunge into recession.
"Both of those extremes were exaggerated," Chan said.
Even so, warning signs abound. IBM -- a bellwether for technology spending -- posted disappointing first-quarter earnings after the market closed Thursday. Its shares plummeted nearly 9% on Friday to $76.70 a share. Because IBM is a major component of the Dow, it contributed heavily to Friday's damage on Wall Street.
