Stocks Finish with Steep Losses

Major indexes fell sharply for the third day in a row on weak economic news and disappointing corporate profits

April 15 proved an especially taxing day for equity investors. Major indexes suffered sharp losses in Friday's session as bad news on the economy and disappointing corporate profits from the likes of IBM Corp. (IBM ) triggered a massive selloff.

On Friday, the Dow Jones industrial average fell 198.41 points, or 1.93%, to 10,080.34. That was the biggest percentage drop for the Dow since May, 2003. The broader Standard & Poor's 500 index was down 18.62 points, or 1.60%, to 1,143.43. The Nasdaq composite index dropped 38.56 points, or 1.98% to 1,908.15.

It was a rough week for the major market benchmarks, with the Dow losing 3.6%, the S&P 500 lower by 3.3%, and the Nasdaq suffering the worst, down 4.6%.

"We're starting to see the result of oil above $50 [a barrel]" says Peter Cardillo, chief strategist with S.W. Bach. "Combine that with weak earnings in the tech group, and indications that economic activity is slowing, and you have a market that is nervous."

Standard & Poor's market analyst Paul Cherney sees a wild card for Monday's session: The public's reaction to a weekend of financial TV shows focusing on this week's selloff in the stock market. "This could cause weakness on Monday," says Cherney.

Next week the economic calendar brings March housing starts and the Producer Price Index on Tuesday, and March's Consumer Price Index on Wednesday.

On the earnings front next week, keep a look out for first-quarter announcements from Bank of America (BAC ), Eli Lilly (LLY ), and Texas Instruments (TXN ) on Monday, Coca-Cola (KO ) on Tuesday, and Altria (MO ) on Wednesday.

Some economic releases regarding inflation and consumer sentiment spooked traders on Friday. U.S. import prices jumped 1.8% in March, above median estimates, while export prices increased by 0.7%.

The University of Michigan consumer sentiment index was 88.7 for the month of April. Consensus estimates were for 92, but this number was well above market rumors of a sub-80 number flying around earlier in the day.

Industrial production rose 0.3% in March, in line with expectations. The capacity utilization rate rose 0.1% to 79.4%, approaching the 80% level that usually triggers capacity expansion, notes Standard & Poor's.

Crude oil prices settled down 64 cents on Friday, at $50.49 a barrel.

In earnings news, Citigroup (C ) beat analyst expectations slightly, posting earnings of $1.04 per share in the first quarter on a 6.2% revenue rise. The bank also announced it will raise the figure of a planned stock buyback, to $16.3 billion.

General Electric (GE ) saw earnings of 38 cents per share in the first quarter, on a 19% revenue rise. The company said it expects full year earnings to be at the high end of its previous guidance.

IBM fell short of Wall Street estimates, posting earnings of 85 cents a share, vs. 79 cents last year in the first quarter. Standard & Poor's, First Albany, and CS First Boston all downgraded the stock.

Genentech (DNA ) is up over 15% on news that its breast cancer drug Avastin met the primary efficacy endpoint in trials. JP Morgan and Deutsche Bank both upgraded the stock.

Sun Microsystems (SUNW ) posted a 2 cent loss and a 1% total revenue decline, vs. an 8 cent per share loss in the first quarter of last year. Standard & Poor's reiterated its hold rating on the stock, while First Albany downgraded it to underperform.

Treasury Market

Treasury prices finished higher in very choppy trading, as traders took in the slew of economic data. The yield on the benchmark 10-year note finished at 4.26%.

World Markets

European stock markets finished lower Friday. London's Financial Times-Stock Exchange 100 index was down 53.80 points, or 1.09%, to 4,891.60.

Germany's DAX index fell 89.80 points, or 2.04%, to 4,312.25.

In Paris, the CAC 40 index lost 78.83 points, or 1.92%, to 4,032.28.

Asian markets finished lower on Friday. In Japan, the Nikkei 225 index fell 192.48 points, or 1.66%, to 11,370.69.

Hong Kong's Hang Seng lost 133.65 points, or 0.97%, moving to 13,638.75.

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