Dow suffers its worst weekly drop ever

ByABC News
October 13, 2008, 2:28 PM

— -- Investors who already thought they'd been through enough suffered through a wild day Friday as the U.S. stock market finished its worst week ever.

The Dow Jones industrial average ended the day down 128 points at a new five-year low of 8,451.19. It was an incredible day in which the Dow plunged 697 points early, was up as much as 322 points later, and had its first 1000-point intraday swing in history, according to Dow Jones indexes.

Even with the late rebound, it capped a brutal eight straight days of selling and the market's worst week ever. The Dow fell 1874 points, or 18% during the week, which on both a point and percentage basis, is more than in any week in the average's 112 -year history. The next largest weekly decline occurred in July 1933, when the Dow fell 17%.

The news wasn't any better with the Standard & Poor's 500 index, which fell 10.70 points, or 1.2%, to 899.22. It's the first time in history the S&P 500 has fallen by 1% each day for seven straight days.

But there was a bright spot for the day as the technology-heavy Nasdaq composite index ended the day with a gain, up 4.39 points to 1649.51. Even though technology stocks have begun to emerge as an area of relative strength, the Nasdaq is still down 37.8% this year.

The market's volatility has been jarring. The Dow's daily moves over the past 30 days has averaged a record in points, 422, and percentage, 4.02%, says Fane Lozman of Scanshift.com.

Most of the pain come from some areas that had been holding up relatively well outside of tech up until this point. Gold stocks for instance declined 14.0%, making it the second worst industry group in the S&P 500 after broadcast media. Oil & gas drilling, energy exploration and entertainment stocks were also weak.

It's getting harder for some investors to hang on, shown by the fact the Dow experienced its first 1000 point swing from low to high in its history. And the losses are massive. The Dow is down 40.3% from its record close last year on Oct. 9, 2007.

Even so, investors with properly diversified portfolios should remain calm even though there's panic around them, says Mark Hebner of asset management firm Index Funds Advisors. "The people that get hurt on a rollercoaster are the ones that try to get off while it's moving," he says.

But there were signs Friday that some investors believe the market is near a bottom. On Thursday, selling accelerated in the last hour of trading. The Dow was down 221 points at 3 p.m. but closed down 679 points an hour later. On Friday, the Dow was down 468 points at 3 but rocketed 790 points and was up 322 points just after 3:30. It then sold off but closed down only 128.