Stock prices fall sharply

The Dow dropped for the fifth straight day.

NEW YORK (AP) — The Dow Jones industrial average dropped more than 360 points Friday — the anniversary of the Black Monday crash 20 year ago — as renewed credit concerns, lackluster corporate earnings and rising oil prices spooked investors.

The market turned sharply lower in late afternoon when Standard & Poor’s again reduced its ratings on residential mortgage-backed securities. The latest reduction, on more than 1,400 types of securities, added to investors’ unease about credit quality.

In addition, mixed results from Dow components Caterpillar Inc., Honeywell Inc., and 3M Co. gave investors little incentive to take chances on the market. And oil prices added to investors’ list of concerns after briefly moving above the psychological barrier of $90 per barrel for the first time.

In one bright spot, Google Inc. reported stronger-than-expected profits, drawing a number of analyst upgrades.

“I was not surprised there was some correction, given our expectation that earnings growth was going to fall short of expectations,” said Alan Gayle, senior investment strategist, director of asset allocation for Trusco Capital Management.

“I think stock analysts were slow to incorporate the impact of the subprime crisis on third-quarter earnings,” he added.

According to preliminary calculations, the Dow fell 366.94, or 2.64 percent, to 13,522.02. The Dow was down for the fifth straight session.

Broader stock indicators also fell. The Standard & Poor’s 500 index fell 39.45, or 2.56 percent, to 1,500.63, and the Nasdaq composite index dropped 74.15, or 2.65 percent, to 2,725.16.

The Nasdaq fell below the noteworthy technical level of 2,750, adding to selling pressure.

Friday’s pullback pales in comparison to what traders on the floor of the New York Stock Exchange had to contend with 20 years ago. On Oct. 19, 1987 — Black Monday — the Dow plunged 23 percent amid concerns about interest rates and slowing economic growth.

A decline of similar proportion given the market’s current levels would mean a drop of some 3,000 points.

A decline Friday in the NYSE composite index proved steep enough, however, to trigger trading curbs, which puts restrictions on certain types of sell orders. These protections were set up in part in response to Black Monday.

Bonds prices rose again Friday, extending a rally to an unusual five sessions.

The yield on the benchmark 10-year Treasury note, which moves inversely to the price, fell to 4.40 percent from 4.50 percent late Thursday.

The dollar was mixed against other major currencies, while gold prices fell.

After touching $90.07 overnight, light, sweet crude fell 87 cents to settle at $88.60 on the New York Mercantile Exchange.

Prices have spiked due amid forces such as a weak dollar and thin supplies at a key Midwest oil terminal.

“Investors are starting to get concerned about both the pace of the U.S. economy and the pace of earnings growth,” said Art Hogan, chief market strategist at Jefferies & Co.

“We’ve got a multitude of earnings that are less than optimal in spaces outside the financials,” he said.

Hogan noted that for much of the week investors focused on results from banks, which saw profits drop on souring mortgage loans and tight credit markets. But seeing weakness Friday in industrial company earnings reports increased their nervousness.