Wall Street ends week on a downer

January 25, 2008 7:15:33 PM PST
Wall Street ended a tumultuous week by turning cautious Friday, giving up sizable early gains and closing sharply lower as investors cashed in profits before the weekend. The Dow Jones industrials lost more than 170 points. Investors' initial burst of enthusiasm, which sent each of the major indexes up more than 1 percent, came after upbeat profit reports from big names like Microsoft Corp. and word of a possible buyout of a trouble bond insurer.

The decline wasn't surprising given that investors putting down bets ahead of the weekend were coming off two days of big gains.

"People may be looking to take some profits off the table in this volatile market. And there's a lot of activity that's coming up next week," said Scott Fullman, director of investment strategy for I. A. Englander & Co.

President Bush is scheduled to deliver his State of the Union address Monday. Meanwhile, the Federal Reserve is expected to hold its first regularly scheduled meeting of the year on Tuesday and Wednesday, and then the Labor Department plans to weigh in on the state of the job market on Friday.

Signs that the job market may have further to fall added to the market's anxiety. Media reports Friday that Goldman Sachs is laying off the bottom performing 5 percent of its work force followed an announcement Thursday by Ford Motor Co. that it is offering buyouts and early retirement to 54,000 hourly workers and laying off some salaried workers, too.

"The economy is still up in the air because so much of it depends on people having paychecks," said Kim Caughey, equity research analyst at Fort Pitt Capital Group.

In the final hour of trading, the Dow fell 171.44, or 1.38 percent, to 12,207.17. The Dow had been up more than 100 points in the early going.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 21.46, or 1.59 percent, to 1,330.61. The technology-heavy Nasdaq composite index fell 34.72, or 1.47 percent, to 2,326.20.