Wall Street rebounded Friday after four days of heavy losses, but still ended the week substantially lower in what analysts agree has become a full-fledged stock market correction.
The question on investors’ minds was whether Friday’s rebound, following a four-day loss of 467.17 points in the Dow Jones industrial average, was an isolated blip or marked an end to the sell-off.
“We’ve had the 5 percent correction that everybody’s been waiting for, and the market’s way oversold now,” said Michael Murphy, head trader at Wachovia Securities. “But is what we’re seeing going to be a big bounce or a small bounce? That’ll be the big test.”
The Dow industrial average climbed 111.70 points, or 1.1 percent, to 10,240.08 Friday.
Broader stock indicators also finished higher. The Standard & Poor’s 500-stock index rose 13.79 points, or 1.3 percent, to 1,120.57, and the tech-laden Nasdaq composite index jumped 40.84 points, or 2.1 percent, to 1,984.73.
Friday’s gains did little to offset the losses of the previous four days.
For the week, the Dow lost 355.47 points, or 3.4 percent, the worst week for the Dow since late March 2003. The Nasdaq index fell 62.92 points, or 3.1 percent, and the S&P 500 lost 36.26 points, or 3.1 percent. All three indexes finished down for the year.
Joseph Battipaglia, chief investment officer at Ryan Beck & Co., attributed Friday’s gains to the strong economic foundation that remained from the markets’ nearly 12-month rally, which kept money from fleeing out of stocks and into bonds or commodities.
“This is very typical of a healthy market,” he said. “The market needed to correct itself to bring stock prices back in line, and now it looks to me that investors are looking at this as a chance to buy.”
Buyers were aided by the widely watched University of Michigan consumer sentiment index, which slipped to a better-than-expected 94.1 in March from 94.4 at the end of February, according to media reports on the subscriber-only index. The preliminary tally will be revised at the end of the month.
However, the confidence index did not take into account this week’s losses on Wall Street or the increased threat of terrorism after the train bombings in Spain that killed 199 people on Thursday.
The government provided yet another set of contradictory economic reports before Friday’s session. Business inventories rose 0.1 percent in January, and business sales climbed 0.4 percent in the same period. But the Commerce Department also reported that the deficit in the current account — the broadest measure of U.S. trade — rose 12.7 percent in 2003 to an all-time high of $541.8 billion.
Of course, Friday’s gains could be an aberration rather than a sign that the selling has ended. In the absence of strong economic data, investors have little positive market-moving news to look forward to until first-quarter earnings reports in April. However, the Federal Reserve could provide a boost when it releases a statement after Tuesday’s meeting on interest rates.
Software maker Oracle Corp. was down 19 cents at $12.06 after the company reported a profit of 12 cents per share, continuing its financial recovery and meeting Wall Street estimates.
Book retailer Borders Group reported improved sales at its stores and beat analysts’ expectations by 9 cents per share. Borders gained 94 cents to $24.11.
Petco Animal Supplies Inc., the pet store chain, slumped 80 cents to $30.30 despite beating estimates by 3 cents and reporting a 7.8 percent increase in quarterly profits.
Lockheed Martin said it would delay a final shareholder vote on its proposed merger with technology firm Titan Corp. while the government investigates questionable payments from Titan to foreign consultants. Lockheed fell 15 cents to $44.48, while Titan rose 76 cents to $20.20.
Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange, where volume was moderate.
The Russell 2000 index of smaller companies rose 14.09 points, or 2.5 percent, to 582.83.
Overseas, Japan’s Nikkei stock average dropped 1.2 percent. Europe’s markets staged a modest rebound from Thursday’s losses in the wake of the terrorist attack in Spain. Britain’s FTSE 100 closed 0.5 percent higher, France’s CAC-40 rose 0.4 percent and Germany’s DAX index gained 0.3 percent.