Bear Rally Ends at 8 Days

Eight is enough

RTGAM




Well, that was a disappointing end to the week. North American indexes flopped in afternoon trading on Friday, capping the winning streak of Canada's benchmark index at eight days and renewing concerns that U.S. indexes are by no means in the clear just yet.


The Dow Jones industrial average closed at 7,278.38, down 122.42 points or 1.7 per cent. Still, for the week, the 30-stock index rose 55 points or 0.8 per cent - marking the second consecutive week of gains. The broader S&P 500 closed at 768.54, down 15.5 points or 2 per cent.


The VIX volatility index, a widely followed index that is seen as a reflection of investor anxiety, rose to 46 - putting it in the middle of its recent range and well above the lows of previous years.


General Motors Corp. rose 10.8 per cent and Ford Motor Co. rose 9.6 per cent on signals from the U.S. government that it won't let the automotive sector fail. As well Merck & Co. Inc. rose 2.6 per cent and Johnson & Johnson rose 3.2 per cent.


However, one of the key sources of the recent rally worked against the market on Friday, when financials switched back into laggard mode after the Federal Deposit Insurance Corp. said that bank failures over the next five years would cost the agency $65-billion - suggesting that the financial sector isn't on safe ground just yet.


Bank of America Corp. fell 10.7 per cent and JPMorgan Chase & Co. fell 7.2 per cent. General Electric Co., which tends to move in the same direction as financial stocks, due to its large but troubled financial arm, fell 5.8 per cent.


In Canada, the S&P/TSX composite index closed at 8,506.35, down 184.14 points or 2.1 per cent - although it rose 2.4 per cent for the week.


Energy stocks were big drags on the index, a day after they rallied, even though the price of crude oil held steady, at about $52 a barrel. Suncor Energy Inc. fell 7.5 per cent and Canadian Natural Resources Ltd. fell 3.7 per cent.


Financials were also weak, following the lead of their U.S. counterparts, with Bank of Nova Scotia down 1.8 per cent and Manulife Financial Corp. down 4.7 per cent.

Copyright 2001 The Globe and Mail