Stocks end Friday with a modest losses, up for week

ByABC News
October 17, 2008, 6:28 PM

NEW YORK -- Stocks ended a tumultuous two-week run relatively quietly Friday, finishing another back-and-forth session down modestly as investors were cheered by signs of easing in the credit markets and absorbed lackluster economic news.

The expiration of options contracts helped tug the market in different directions throughout the session. Still, the Dow Jones industrial average traded within a narrower range than it had in much of the past two weeks. The Dow ended down 127 but big rallies on Monday and Thursday gave the blue chips an advance of 4.8% for the week the best weekly gain since March 2003.

The market spent the first half of the session vacillating, moving between gains and losses after the government said Housing starts fell more than 6% last month to the lowest pace since early 1991. But investors' mood seemed to pick up later in the session as lending rates for bank-to-bank loans eased, indicating some bank fears about not being repaid by borrowers is easing. Demand for safe-haven investments like Treasury bills also decreased. The final hour of trading again proved pivotal as it has in much of October; stocks fluctuated as investors squared away positions for the week.

Given the magnitude of most of the recent sessions in October, the indexes' moderate declines Friday seemed barely noteworthy. And advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to 1.74 billion shares.

The loosening of credit markets appeared to draw most of investors' attention. The London interbank offered rate, or Libor, for three-month dollar loans fell to 4.41% from 4.50% on Thursday, the fifth consecutive day of declines.

"I think we're beginning to get a slightly better feeling in the credit market," said Peter Cardillo, chief market economist at Avalon Partners, a New York brokerage house, pointing to the move in Libor. "I'm sure we'll still have a strong bear grip to the market but I do believe the market was way oversold. I do believe we've made a bottom."