NEW YORK — Wall Street, consumed by political and economy uncertainty, sold stocks sharply lower for the fourth time in five sessions Friday, giving the Dow Jones industrials their biggest one-week point decline ever.
The stock market’s best-known indicator fell more than 140 points for the day and 1,369.70 for the week, by far eclipsing the previous one-week record drop of 821.21 set March 16.
Clearly, Americans were in no mood to take chances in the first week of trading after the attacks on the World Trade Center and the Pentagon. The market was closed for four days after the attacks, and so this week’s trading, which sent stocks to their lowest levels in almost three years, represented Wall Street’s reaction to the assaults.
Friday’s trading was volatile amid worries about how the United States will retailiate for last week’s terrorist attacks and how much the economy will suffer in the months ahead. Technical factors that can make prices fluctuate in the best of times also affected the activity.
The Dow had several big swings — falling 313 points in the opening minutes of trading, surging to a gain of more than 50 points an hour later and then falling back again.
“This is an extraordinarily emotion-filled stock market environment,” said Hugh Johnson, chief investment officer at First Albany. “Investors are scrambling to defend their nest eggs.”
The Dow fell 140.40 to 8,235.81, a loss of 1.7 percent, according to preliminary calculations. The Dow’s drop for the week amounted to 14.26 percent; that is the fifth-largest percentage decline and the biggest since May 1940, when the Dow traded at 122, less than the decline alone on Friday.
The Nasdaq composite index was down 47.74 or 3.3 percent at 1,423.19, while the broader Standard & Poor’s 500 index fell 18.74 or 1.9 percent to 965.80.
Three stocks fell for every one that rose on the New York Stock Exchange — an improvement over the 10-to-1 ratio in early trading. NYSE volume was extremely heavy at more than 2 billion shares, ahead of the 1.93 billion traded Thursday.
Another sign of the heavy selling: One of out of every four stocks that traded on the NYSE posted a new 52-week low.
While the market historically falls in the first few weeks or months following catastrophes and other conflicts, such as the Persian Gulf war in 1991, and then heads higher over the long term, Johnson said that’s no comfort to investors right now.
“They are saying, ‘Just get me out at all costs. I can’t stand anymore,”’ Johnson said. “I try to give them perspective by looking at other crises. But even when you give them perspective, they dismiss it, because they are so scared.”
Friday’s volatility was also due to what’s known as a triple witching session, the quarterly expiration of index futures and index and stock options. Many of the expirations occurred at the opening of trading and investors chose to sell rather than roll the contracts forward amid the political and economic uncertainty.
Analysts also said there was a great deal of mutual fund redemptions and margin calls by large institutions — a demand that investors repay money borrowed to buy stocks earlier.
“It’s monolithic. Everyone is on one side of the market,” said Ronald J. Hill, investment strategist at Brown Brothers Harriman & Co.
Analysts said it was unclear why the Dow briefly flirted with positive territory Friday. The most likely factor, they said, was a positive outlook by General Electric, which said in late morning it is on track to deliver double-digit earnings growth in 2001 and 2002. GE rose 93 cents at $31.30.
Analysts expected the market to continue to swing throughout the session, particularly as another round of expirations was to come at the close of trading.
“There is another storm to weather at the close,” Hill said.
Stocks also fell overseas amid uneasiness about U.S. plans to retaliate against last week’s terrorist attacks. Japan’s Nikkei stock average finished the day down 2.4 percent. Britain’s FT-SE index closed with a loss of 2.7 percent, France’s CAC-40 fell 2.3 percent, Germany’s DAX index declined 0.6 percent.
The fact that the Dow industrials — America’s most stalwart companies — have fallen so sharply proves how afraid investors are. Investors see no choice but to sell amid uncertainty following the terrorist attacks.
Until the market gets some answers about what the future holds for the economy and the overall country, analysts expect investors to continue to sell stocks across market sectors.
The economic repercussions from the attacks have already appeared as companies have announced thousands of layoffs and plans to reduce operations.
All major U.S. airlines have announced layoffs. Insurance companies have said they will suffer monumental payouts from the country’s worst-ever crisis. Retailers, bankers, hotel chains and travel agents say skittish consumers are further clamping their spending.
Among Friday’s losers were Northwest Airlines, falling 56 cents to $10.45 after announcing 10,000 layoffs.
And, insurer MetLife declined $1.23 to $25.20, retailer Best Buy fell $2.20 to $43.26, banker J.P. Morgan Chase stumbled 74 cents to $30.82 and online travel agent Expedia slipped 93 cents to $21.75.
Data storage company EMC, which said it is cutting about 2,400 jobs and will likely post a third-quarter loss, tumbled $1.47 to $11.15.
Volume was extremely heavy at more than 2 billion shares, ahead of the 1.93 million shares traded Thursday.
The Russell 2000 index, which tracks smaller company stocks, was down 8.76 at 378.89.