Stocks Fall, Capping Wild Week

U.S. indexes dropped late on Friday, but still posted their first weekly gain in five weeks. Glum reports on housing starts and consumer sentiment fanned recession fears

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U.S. stocks ended lower after shifting direction several times Friday, a trading session that capped one of the wildest weeks in Wall Street history.

"Equity markets have exhibited huge price swings this past week, with implied volatility soaring to new highs," said UBS chief economist Larry Hatheway. "The week's sharp gyrations in global equity markets also underscore the tension between dismal earnings prospects and ostensibly cheap valuations," he added.

Stocks started Friday in negative territory, then spent most of the day higher despite some gloomy economic news: A much worse-than-expected reading on new-home construction activity in September and a sharp drop in a key consumer sentiment gauge in October. Then, in the last hour of trading, stocks bounced into negative territory again.

On Friday, the Dow Jones industrial average ended down 127.04 points, or 1.41%, to 8,852.22. The S&P 500 index fell 5,88 points, or 0.62%, to 940.55. The tech-heavy Nasdaq composite index was off 6.42 points, or 0.37%, to 1,711.29.

On the New York Stock Exchange, 17 stocks moved higher for every 14 losing ground. On the Nasdaq, the ratio was 16 to 12 negative.

Bonds finished mixed, while the dollar index rose and gold futures lost ground. Oil futures rebounded to above $70.

On Friday, President Bush, in a speech on the U.S. economy Friday, said that the credit market will take a while to thaw, but that Americans should be confident that it will.

Also, shares of technology titans Google (GOOG) were higher on positive earnings news.

Despite Friday's decline, major indexes ended the week higher, with the Dow up 4.75%, or 401 points, and the S&P 500 rising 4.6%. Those solid gains belie the market's huge price swings from day to day and even from hour to hour. On Monday, the Dow surged 11.1%, or 936.42, the best percentage rise in the index since the early 1930s. On Wednesday, Oct. 15, the Dow fell 7.87%, the steepest daily drop since 1987.

But this week was a big improvement over previous weeks. In fact, it was the first weekly rise in major indexes in five weeks. Last week, the week ending Oct. 10, the Dow fell 18.15%, the index's worst week ever, while the S&P 500 fell 18.2%, its second worst week ever.