Wall Street took a pounding over the past week, with blue chips suffering their worst week in more than four years as fears about the housing market and tightening credit sent investors diving for cover.
The sharp moves, which snowballed in the latter half of the week following two weaker than anticipated reports on the housing market, occured a week after the Dow smashed through the 14,000 barrier for the first time ever.
The blue-chip Dow plummeted 4.23 percent for the week to end Friday at 13,265.47, its steepest decline since March 2003.
The broad-market Standard & Poor's 500, which also rocketed to a record high a week earlier, slid 4.9 percent to 1,458.95.
The tech-dominated NASDAQ composite slumped 4.66 percent on the week to finish at 2,562.24.
Analysts tied the dramatic losses to fears over "subprime" mortgages granted to US consumers with stretched finances and a related tightening of credit standards on big corporate loans, often used to finance deals and takeovers.
"It's a generalized repricing of risk. It had its origins in the subprime mortgage market and is spreading elsewhere. People are dumping higher yielding assets," said Jay Bryson, an analyst at Wachovia Securities.
"Whether it starts to feed on itself or cascade, that's still a question. We would judge the fundamentals of the economy to be sound, not only in the US but globally, so there is no economic reason this has to go on. But these things can sometimes feed on themselves," Bryson said.
US officials talked up a report on US economic growth on Friday, which showed the US economy expanded at a 3.4 percent growth clip, up from 0.6 percent in the first quarter. But analysts said this report was backward rather than forward-looking.
Wall Street's losses coincided with market turmoil around the world, with other markets closely linked to US credit problems.
"There is little doubt that this week's tumultuous events officially sound the death knell for cheap money," said Douglas Porter at BMO Capital Markets.
"The broader risk is that a now-humbled equity market will knock away one of the last props for a beleaguered US consumer. Already burdened with sagging home prices, high energy costs and a puny savings rate, households are highly vulnerable to an added shock. This may prove to be just such a shock," Porter said.
The week's stock meltdown gathered pace after an industry survey Wednesday showed sales of existing US homes fell much more heavily than predicted in June, to an annualized pace of 5.75 million, marking their lowest level in over four and a half years.
The yield on the 10-year US Treasury bond dropped to 4.788 percent from 4.956 percent a week earlier.
The 30-year bond yield fell to 4.947 percent from 5.064 percent.
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