Stocks staged a huge turnaround Friday morning, with the Dow erasing most of a 700-point slide as fears of a global recession were countered by a willingness of some traders to step in at five-year lows.
The Dow Jones industrial average was down 40 points in the early going after having fallen nearly 700 points. The Standard & Poor’s 500 index was down modestly and the Nasdaq composite rose.
U.S. markets took a beating Thursday, with the Dow industrials plunging nearly 700 points to a five-year low, as panicked investors dumped stocks.
On Friday, General Electric reported third-quarter financial results that were in line with estimates. The company posted a 10% drop in earnings from continuing operations and an 11% gain in revenue, meeting analyst expectations.
The company is considered a stock market bellwether, so its financial results are closely watched. The company had previously lowered its guidance, citing the financial crisis. GE reaffirmed that outlook and also said its financial services arm, which has been hard hit by the crisis, reported a 30% drop in profit that met forecasts. GE shares rose 1% Friday morning.
Investors have been pulling money out of stock mutual funds as the crisis has deepened. A full $43.3 billion was taken out during the week ended Oct. 8. That’s on top of the $7.2 billion investors hoarded during the previous week.
President Bush is slated to speak about the economy shortly after 10 a.m. ET, hoping to calm panicked investors.
Also, finance officials from the Group of Seven industrialized nations are meeting in Washington Friday to address the financial meltdown.
Economic news: Two government economic reports came out Friday morning.
The Commerce Department reported that the U.S. trade deficit, which measures the difference between the nation’s output and demand, declined in August to $59.1 billion. The trade gap was smaller than in July, when the deficit was revised to $61.3 billion.
The deficit in August was slightly larger than the $59 billion that economists polled by Briefing.com had forecast.
The Labor Department reported that its Import Price Index decreased 3% in September, led by a decrease in petroleum prices. In addition, prices for overall exports decreased 1.0% for the month.
Oil and the dollar: Crude prices, which have been under pressure amid fears over weakening demand, was down $3.66 to $82.93 and had tumbled as much as $7.98 a barrel to $78.61.
Worries that the global crisis will undercut world demand prompted OPEC to announce plans for an emergency meeting Nov. 18 to address the issue. Prices have plunged some 80% from the record $147.27 a barrel set on July 11.
Meanwhile, the U.S. dollar has whipsawed as nervous investors jump in and out of the greenback. The dollar dipped lower versus the British pound and the euro but edged higher versus the Japanese yen.