US Market Summary 8 Feb 08

Dow 12,182.13 -64.87 -0.53%
Nasdaq 2,304.85 +11.82 +0.52%
S&P 500 1,331.29 -5.62 -0.42%

Weekly Recap - Week ending 08-Feb-08

What the market giveth, it also taketh away. Fortunately, it has given a lot more than it has taken through the years, but in the past week it wasn't in much of a giving mood at all.

The major indices suffered sharp losses and essentially gave back the prior week's gains, which is saying something considering that the Dow, Nasdaq, S&P 500 and Russell 2000 surged 4.4%, 3.7%, 4.9% and 6.1%, respectively, in the prior week.

The past week started out in expected fashion, which is to say Monday's session was governed by profit taking that transpired in an orderly fashion. That deliberate effort, though, soon gave way to heightened selling interest when a remarkably weak ISM Services report on Tuesday reignited recession concerns.

With respect to the latter report, the Institute for Supply Management's business activity index showed a stunning drop to 41.9 from 54.4 in December. Under a new computation methodology, the non-manufacturing index, which is the new composite reading for this report, checked in at 44.6. A number below 50 signifies contraction. In the case of the January number, it marked the first contraction in the services sector in nearly five years.

This report, which typically doesn't show such dramatic swings, sparked a broad-based wave of selling activity that was exacerbated by the specter of bond insurer downgrades and the residual impact on the financial sector, which plummeted 8.6% this week. On Tuesday alone, the Dow dropped 370 points, the Nasdaq declined 73 points and the S&P 500 plunged 44 points.