Sun, Jul 22, 2007 - Page 10 News List

US stocks sag after Dow Jones shoots past 14,000 points


The US stock market took a hit over the week to Friday, despite the Dow blue-chip index smashing the 14,000-point barrier for the first time ever, amid renewed fears about the US mortgage and housing market.

Market participants said Google and Microsoft's latest quarterly earnings reports had also weighed on the market as Google's profit, at US$925 million, fell short of expectations and analysts fretted over Microsoft's future performance.

Several lackluster economic reports released during the week had also dented investors' optimism by week's end.

The blue-chip Dow Jones Industrial Average shed 0.40 percent for the week to end on Friday at 13,851.08. The broad-market Standard & Poor's 500, which also rocketed to a record high earlier in the week, lost a hefty 1.19 percent to 1,534.10.

The tech-dominated NASDAQ composite declined 0.72 percent on the week to finish at 2,687.60.

Despite the volatile swings of the past week, however, the indexes remain close to all time or multiyear highs, largely due to the recent wave of big mergers and acquisitions.

Some market participants said next week could be just as heady.

"It will be a very exciting week. We will have a real focus on the economy and inflation and we also want to hear how the rest of corporate America is doing on the earnings front, what kind of guidance we will start getting," said Art Hogan, an analyst at Jefferies & Co.

"So far, earnings have been good, with notable misses though as Google missing was a surprise for everybody," Hogan said, adding that concerns remain about the US housing market.

But stocks hit a roadblock on Friday as concerns re-emerged over the US housing market, and subprime loans granted to people with patchy credit records. Rising home foreclosures and late mortgage payments have sparked fears that the housing downturn could impact consumer spending, a key economic driver.

Investors' nerves were also shaken a little further Thursday after US Federal Reserve Chairman Ben Bernanke said he expected "significant financial losses" to occur from failed subprime real-estate loans.

Next week will also see the continuation of the second quarter earnings season with results due from automaker Ford, drug group Merck, telecoms giant AT&T, online retailer Amazon, aviation group Boeing and oil giant ExxonMobil among others.

Bond prices firmed as investors looked for safe havens. The yield on the 10-year US Treasury bond dropped to 4.956 percent from 5.107 percent a week earlier. The 30-year bond yield fell to 5.064 percent from 5.194 percent. Bond yields and prices move in opposite directions.

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