Economic news has stocks trading up and down again
NEW YORK -- Wall Street stocks seesawed in relatively quiet trading Friday after the government said new home construction dropped by more than expected last month to the lowest pace since early 1991. The Dow Jones industrial average at times managed moderate gains after falling more than 250 points shortly after the open.
Housing starts fell more than 6% in September to an annual rate of 817,000 units, the Commerce Department reported. That figure is lower than the 880,000 units forecast by Wall Street economists surveyed by Thomson/IFR. Building permits also sank.
The report is another piece of evidence that the nation is struggling with a weak economy that, if the financial crisis is not solved, could dive into a sustained downturn. President Bush said in a speech Friday that the credit market — where many companies find funding for their operations — will take a while to thaw, but that Americans should be confident that it will.
Investors appeared to look past a reading on October consumer sentiment, perhaps because it was expected after a stream of other negative data on consumers. A weaker-than-expected report on retail sales Wednesday made clear that consumers nervous about the economy and the faltering stock market are less willing to pull out their wallets. The Reuters/University of Michigan's index of consumer sentiment fell to 57.5 from 70.3 in September.
It's been an erratic week on Wall Street, with the Dow soaring 936 points on Monday, slipping moderately Tuesday, sinking 733 points Wednesday, and then rallying 401 Thursday. The volatility is not providing investors with much relief, but it is a welcome change from last week's relentless plunge, during which the Dow logged its worst week ever and Wall Street lost about $2.4 trillion in shareholder wealth.
David Dietze, president at Point View Financial Services in Summit, N.J., contends that much of the market's whipsaw moves in the past month have come as hedge funds and mutual funds were forced to sell positions because some shareholders were cashing out.
