NEW YORK — U.S. stocks on Friday lapsed back into the cellar to close with weekly losses after a late-day burst into positive turf that followed reports that Federal Reserve Chairman Ben Bernanke offered the central bank’s discount window to battered mortgage lenders Fannie Mae and Freddie Mac.
“The biggest culprits are bouncing off their lows. It amounts to throwing a deck chair off the Titanic, obviously,” said Art Hogan, chief market strategist at Jefferies & Co.
Off its earlier lows that had the Dow Jones industrial average dropping below the 11,000 level for the first time since August 2006, the blue-chip index settled at 11,100.54, down 128.48 points, or 1.1 percent.
For the week, the Dow lost 1.7 percent.
Of the Dow’s 30 components, 21 settled lower, with Chevron Corp. fronting the declines, off 4.2 percent.
The spiking price of crude oil also weighed, with tensions between Iran and the West and worries about supply sending futures to an all-time high above $147 a barrel in electronic trade on Globex. On the New York Mercantile Exchange, crude closed up $3.43, at $145.08.
Of reports that Bernanke had offered use of the discount window to the government-sponsored entities, Hogan said: “That would be the logical follow-through to (Treasury Secretary Hank) Paulson saying we’re going to give them access to capital. But they still have a trillion dollars of exposure to mortgages they guaranteed.”
Investors were especially leery about the ailing financial sector with second-quarter results on tap next week from big institutions including Merrill Lynch & Co. and J.P. Morgan Chase & Co.
Shares of Dow component General Electric Co. tilted slightly higher after the conglomerate affirmed its 2008 outlook and reported results that met forecasts. The Dow component also said that it would sell its Japanese consumer-lending unit for $5.4 billion.
“GE got us ready for what we’re going to be listening to: in-line number, lackluster guidance. Other than with financials next week, we get no guidance and have no idea where we’re going,” said Hogan.
General Motors Corp. led the minority gains among the blue chips, with the shares of the automaker up 2.4 percent.
The S&P 500 index dropped 13.90 points, or 1.1 percent, to 1,239.49, giving it a weekly loss of 1.9 percent from last week’s finish.
Of the S&P’s 10 industry groups, all fell, with the bloodletting fronted by financials, off 2.5 percent.
The Nasdaq composite index skidded 18.77 points, or 0.8 percent, to 2,239.08, giving the technology-laden index a 0.3 percent weekly loss.
Volume on the New York Stock Exchange topped 1.7 billion shares, and decliners topped advancers by a ratio of more than 2-to-1. On the Nasdaq, more than 1 billion shares traded, and decliners barely outnumbered advancing issues.
