The Dow Jones industrials shattered their post-terrorist attack lows Friday in a dramatic 390-point selloff that began with news of a government investigation at Johnson & Johnson and quickly turned into a full retreat by bruised investors.
It was the average's seventh biggest point drop ever, and its lowest close in nearly four years. Analysts attributed the declines to Wall Street's unwillingness to make any bets in a market that appears capable of only falling farther stocks have now fallen sharply for nine straight weeks.
"There is just no good news out there right now, and people are not willing to get involved in the market going into a weekend," said Bryan Piskorowski, a market commentator at Prudential Securities. "You've got a buyers' strike going on."
The Dow closed down 390.23, or 4.6 percent, at 8,019.26, after falling as much as 442 points in the final minutes of the session. The finish put the average 216 points beneath the Sept. 21 close following the terrorist attacks and at levels last seen in October 1998. It was also the Dow's seventh biggest one-day point drop ever, after a 436.37 point drop on March 12, 2001.
Broader stock indicators, which have been trading below their Sept. 21 lows for a while, also fell. The Nasdaq composite index slid 37.80, or 2.8 percent, to 1,319.15, and the Standard & Poor's 500 index tumbled 33.80, or 3.8 percent, to 847.76.
For the week, the Dow lost 7.7 percent, the Nasdaq fell nearly 4.0 percent and the S&P dropped almost 8.0 percent.
A reconfiguration of the S&P, as well as the expiration of some index and stock options, added to the volatility. The S&P is replacing its foreign stock components Friday with domestic ones. As a result, funds that track the index had to adjust their portfolios to match.
In trading Friday, J&J dropped $7.88, nearly 16 percent, to $41.55 after The New York Times reported that the FDA and the Justice Department investigating a company factory that makes an anemia drug linked to illnesses in Europe and Canada. The company told the newspaper that it was aware of a government investigation, but did not know its precise nature.
Even though the J&J investigation does not appear to involve accounting issues, investors were unwilling to take any chances and the selling quickly spread across the market. American Express dropped $1.88 to $31.65, while ExxonMobil tumbled $2.35 to $32.40. Not a single stock in the Dow managed to end regular trading with a gain.
Wall Street also reacted negatively to the latest batch of earnings reports. Second-quarter earnings report season began in earnest this week.
Merck fell 50 cents to $41.50 after reporting second-quarter results in line with expectations despite a 4 percent drop in profits.
In the tech sector, Microsoft fell $1.55 to $49.56 after beating analysts' expectations but reducing its forecast for later this year.
Sun Microsystems dropped $1.55 to $4.25, a new 52-week low, after reporting results in line with expectations, but indicating its current quarter's results are being affected by difficult business conditions.
"It's very volatile out there," said Robert Harrington, head of listed block trading at UBS Warburg. "There seems to be a disaster a day, and investors are frustrated."
Also Friday, the Commerce Department reported that the U.S. trade deficit grew to a record $37.6 billion in May, a 4.1 percent increase from the previous month. In a separate report, the Labor Department said consumer prices increased by 0.1 percent in June, suggesting that inflation is still relatively stable.
Declining issues led advancers nearly 4 to 1 on the New York Stock Exchange, which had its busiest day ever. Consolidated volume came to 3.05 billion shares, compared with 2.08 billion shares Thursday.
The Russell 2000 index fell 10.51 to 386.20.
Overseas, Japan's Nikkei stock average slid 2.8 percent. In Europe, Germany's DAX index fell 5.1 percent, Britain's FTSE 100 slipped 4.6 percent, and France's CAC-40 lost 5.4 percent.