U.S. stocks declined on Friday but managed to recoup some of their intraday losses despite news that an NBC employee in New York City tested positive for anthrax, causing new alarm a month after deadly terrorist attacks in New York and Washington.
News of the first anthrax case outside of Florida set off a big retreat in the market, which had already been trading down after new economic data pointed to a still-troubled economy. But stocks moved up from their lows after reports that the discovery of powdery substances in packages elsewhere in New York, Colorado and other states appeared to be hoaxes.
Although officials say they have no indication that NBC case is terrorism-related, the news came a day after the FBI warned of the threat of new terrorist acts in the U.S. and abroad in the next few days. The anthrax scare also came as the U.S. let up some in its fifth night of bombing Afghanistan, which was observing a Muslim day of prayer.
In economic news, Retail sales plunged in September in the wake of the September 11 attacks on the World Trade Center and the Pentagon, recording their sharpest decline in at least nine years, according to the Commerce Department.
In other economic news, higher energy costs helped push U.S. wholesale prices up at a faster-than-expected rate in September, the Labor Department said. However, falling prices for oil may stall that pace in coming months.
Additionally, a leading measure of U.S. consumer sentiment unexpectedly rose in October, despite mounting layoffs, according to news reports. In the first such report to fully reflect the impact of the attacks, the University of Michigan's preliminary October consumer sentiment index rose to 83.4 from 81.8 in September. However, the index remains well below levels seen this summer.
"It's been an incredibly volatile day, with the market turning at every new development: First, the weaker-than-expected retail sales and high PPI figures; then, the better-than-expected University of Michigan consumer confidence report, and, finally, the anthrax scare in New York," says David Coard, principal and head of fixed income sales and trading, the Williams Capital Group, L.P. "Yesterday, renewed investor confidence was driving money from bonds into stocks, but today the flight-to-quality bid has returned, particularly at the short-end, because of new uncertainties."
Economic reports aside, earnings announcements continued. Among the stocks in the news Friday, copier and printer giant Xerox Corp. (XRX) said it expects a wider-than-expected third-quarter loss and was "cautiously" optimistic about fourth-quarter profitability, according to news reports. The company said it expects third-quarter revenues of $3.8 billion to $4 billion and a loss of 22 cents a share to 25 cents a share before restructuring charges of 5 cents a share.
General Electric (GE), the diversified conglomerate which owns NBC, was active after the anthrax report.
And a former Wall Street high-flyer completed its fall from grace. Instant photograhy company Polaroid filed for Chapter 11 bankruptcy protection. The former technology bellwether had fallen behind rivals in the digital photography arena.
The Dow Jones industrial average was off 66.43 points, or 0.71%, to 9,344.02. The tech-heavy Nasdaq Composite Index was up 1.69 points, or 0.10%, to 1,703.16. The Standard & Poor's 500 Index was off 5.80 points, or 0.53%, to 1,091.63.
U.S Treasuries were mixed, as shorter-dated Treasuries surged. In the closely watched wholesale prices report, the Producer Price Index (PPI) climbed 0.4% in September, matching August's rise and well ahead of Wall Street economists' forecasts for a slim 0.1% gain. Excluding the volatile food and energy products, the so-called core rate, was ahead 0.3% for September after falling 0.1% in August. The unexpected jump in the PPI may have limited gains on the long end of the yield curve. Fed funds futures also were higher, factoring in increased odds for another rate cut, with probability rising that the Fed will ease by another 50 basis points at the Nov. 6 Federal Open Market Committee gathering, according to Standard & Poor's.
According to the retail sales report, retail sales dropped 2.4% overall, led by declines in purchases of cars, building supplies and electronics. Excluding the auto sector, sales were off by a smaller 1.6%. The Commerce Department said the declines were the largest since the government began compiling its retail data in its current form in February, 1992.
European markets were mixed. In London, the Financial Times-Stock Exchange 100 index was down 19.40 points, or 0.38%, to 5,145.50, amid profit taking. In France, the CAC 40 added 6.20 points, or 0.14%, to 4,336.88. In Germany, the DAX Index was down 93.33 points, or 1.98%, to 4,625.13, as retail sales rose less than expected in August.
In Asia, the markets ended mixed. The Nikkei surged 285.34 points, or 2.76%, to 10,632.35, aided by U.S. investors appetite for equities on Thursday. Overall, the bourse closed the four-day week up 4.2%. In Hong Kong, the market lost 248.48 points, or 2.36%, to 10,274.13.
An NBC employee in New York has tested positive for anthrax. This is not the respiratory strain that was fatal in Florida, but a skin (cutaneous) anthrax infection, apparently after the employee handled suspicious mail. The individual is apparently responding well to treatment : wire reports.
The Bush administration widened its financial assault on terrorism Friday, naming an additional 39 individuals and organizations to have their assets frozen: Associated Press
The editor of a supermarket tabloid group whose employees were exposed to anthrax said on Friday he believed a letter laced with the bacteria was possibly sent to the newspapers' building and one of the September 11 hijackers might have been involved: Reuters