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Stocks fall; Dow weekly loss tops 1,200

Stocks on Thursday added to horrific losses that have lopped more than 1,200 points off the blue-chip Dow average this week, as corporate warnings of layoffs and worsening earnings after last week's terror attacks stoked fears of more damage to the United States economy.

"Traders are mostly looking for ropes to hang themselves," said Dominic Freud, a senior equities trader at SG Cowen in New York. "There is tremendous depression in the fund management industry. They see their portfolios losing money day after day. I feel like a psychologist most of the day."

Nervous investors kept up the selling for the fourth day since the market reopened after the September 11 attacks on the World Trade Centre towers in New York's financial district.

The Wall Street, mourning the likely loss of nearly 6,000 people, has pushed the major stock indexes down more than 10 percent to new three-year lows since the attack.

The Street eagerly awaited President George Bush's address to Congress later on Thursday, as he plans a military response to the attacks that also slammed part of the Pentagon, near Washington, DC.

United States army units have been ordered to deploy for possible military operations as part of a major build up in and around West Asia.

"What we're seeing here is a continued uncertainty in the market, lack of institutional buying," said Uri Landesman, chief investment officer with AFA Management Partners.

"And so people are just waiting and seeing what happens here: What is the US response going to be like? Are there going to be any more terrorist attacks?"

Stocks were almost unchanged in after-hours trading as Wall Street pondered those questions.

Investors braced for another day of declines on Friday, but said stocks now are good buys.

"Normally those things raise fears of retribution, and at least historically, I don't think they have been good for the market," said Eugene March, portfolio manager at the $1 billion Armada Equity Growth Fund.

"But if you look at basic security market arithmetic, when you compare valuations of stocks versus bonds and cash, I think the stock market looks attractive."

The Dow Jones industrial average dropped 382.92 points, or 4.37 percent, to 8,376.21. The Dow's point loss was among its 10 biggest in history.

The broader Standard & Poor's 500 Index slid 31.56 points, or 3.11 percent, to 984.54. The technology-laced Nasdaq Composite Index sank 56.87 points, or 3.72 percent, to 1,470.93.

The Dow has lost more than 1,200 points this week, or 12.8 percent of its value, and closed at its lowest point since October 1998. All three major indexes -- the Dow, S&P and Nasdaq composite -- are at three-year lows and mired deep in bear market territory.

Trading was heavy as 1.94 billion shares changed hands on the Big Board, where losers outpaced winners by more than 5 to 1. A whopping 589 NYSE stocks and 507 Nasdaq issues hit new 52-week or multi-year lows. On the Nasdaq, decliners outnumbered advancers by more than 3 to 1, as 2.08 billion shares were traded.

The unrelenting selling of stocks in the past 18 months has caused a wealth destruction of historic proportions. Total investor losses of $6.6 trillion since stocks peaked in March 2000 are equivalent roughly to the combined economies of Japan, Germany and France. About $1.2 trillion in investor wealth has evaporated this week, raising fears consumer spending will drop and add more pressure to the economy.

US corporations have announced mass layoffs in the wake of the attacks, with the airline industry alone gearing up to lay off 100,000 employees. The assaults have paralysed the travel industry and are rippling through the already weakening economy, aggravating fears of a recession.

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