Wall Street's very bad week

If you looked away Friday, you might have missed a market rally. Or a plunge.

A soothing government report on employment in July eased concerns that the US might slide back into a recession, and the Dow Jones industrial average rose as much as 171 points soon after trading began.

But fears that Europe's growing debt crisis might threaten US banks and the fragile economy ruled on Friday.

After its early rise, the Dow fell more than 400 points and was down 243 just before noon. Then it rose nearly 400 points in less than an hour and was up 135 points.

The rest of the day, the blue-chip stock index bounced up and down, sometimes by as much as 100 points in less than half an hour.

The Dow Jones industrial average ended the day up 61 points, or 0.5 per cent at 11,444.61. The Standard & Poor's 500 Index edged down just 0.69 of a point, or 0.06 per cent, to finish at 1,199.38. The Nasdaq Composite Index slipped 23.98 points, or 0.94 percent, to close at 2,532.41.

The US economy added 117,000 jobs in July, and hiring in May and June were not as bad as reported previously, the Labour Department reported. The unemployment rate inched down to 9.1 per cent from 9.2 per cent.

In the US, a possible debt default was averted earlier this week, but concerns remain.

In Europe, Italy or Spain could become the next country unable to repay its debt. The two countries have Europe's third and fourth largest economies. European leaders and central bankers might not have the cash needed to prop them up until a larger financial rescue fund can be established.

"The burden of debt has become much more onerous because the outlook for growth is sliding back. That is very concerning for the markets," said Don Smith, economist at ICAP, the largest inter-dealer broker in the world.

"The fear is ultimately about defaults and business failures."

In the US, all three major stock indexes are in correction, that is, they are down 10 per cent or more off their recent highs.

The Dow Jones industrial average fell 5.8 per cent this week. It plunged 513 points last Thursday alone, the worst day for the Dow since 2008.

steady declines

The S&P 500 is down 7.2 per cent for the week and 10.8 per cent since July 22, when its steady declines began.

The Nasdaq composite is down 11.4 per cent since July 22.

Commodities also fell on worries that weaker global economies will mean less demand. Crude oil's price fell US$8.82, to US$86.88 over the week.

Overseas markets also fell. Tokyo, Hong Kong and China all closed down more than 2 per cent. Taiwan lost 5.6 per cent. Asian markets all closed before the jobs report was released in the US. In Europe, shares recovered some of their losses after plunging to their lowest levels in more than a year. Germany's DAX index fell 2.8 per cent. It had been down as much as 4 per cent before the jobs report was released in the US. Other indexes showed smaller losses.

The yield on the 2-year Treasury note fell to 0.29 per cent, after brushing a record low of 0.26 per cent earlier on Friday.

The yield on the benchmark 10-year Treasury note rose to 2.56 per cent after hitting a low of 2.39 per cent last Thursday.

- AP