Wall Street reacts calmly to more bad news
NEW YORK -- Wall Street showed further signs of stability today as investors calmly took in a flurry of downbeat economic and corporate data and largely held on to the gains they've made for more than a week.
The major stock indexes declined but the pullback appeared orderly. The market, which has closed higher in seven of the last eight sessions, appeared to largely take in stride discouraging retail sales reports Thursday and big job cuts at AT&T Inc. and DuPont Co. as well as a weaker-than-expected profit forecast from the drugmaker Merck.
Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams in New York, said traders have become somewhat more immune to the parade of terrible economic data since the market's two-day plunge on Nov. 19 and 20 that wiped 873 points, or 10.6 percent, from the Dow Jones industrials. He contends the bad readings have been built into many investors' expectations.
"The mind-set has changed a little. You just don't have that panic selling all day," he said.
The mostly moderate moves, with the exception of a huge sell-off Monday, have led some analysts to believe that some order may be returning to the market after months of extreme volatility.
"I think you're just going to have down 100, up 200 days," Rovelli said, calling 300-point and 400-point moves in a day less likely as Wall Street becomes more accustomed to horrible economic reports.
But Wall Street still faces a great deal of uncertainty -- for example, plunging consumer spending levels -- that are still expected to set off volatility in the weeks and months ahead. Sales reports issued Thursday showed that retailers suffered a miserable November, deepening fears that the critical holiday period could be the most dismal in decades.
The Labor Department's November employment report could, if it's worse than expected, send stocks sharply lower when it is released on Friday. The market is well aware that consumers who aren't working don't spend, and that consumer spending accounts for more than two-thirds of economic growth.
"It's all about jobs and right now the outlook is pretty downbeat," said Alan Skrainka, chief market strategist with Edward Jones in St. Louis.
In midday trading, the Dow Jones industrial average fell 84.35, or 0.98 percent, to 8,507.34.
Broader stock indicators also declined. The Standard & Poor's 500 index fell 8.64, or 0.99 percent, to 862.10, and the Nasdaq composite index fell 13.62, or 0.91 percent, to 1,478.76.
