Wall Street ends rough week lower

NEW YORK (AP) — Wall Street ended a turbulent week with another astonishing show of volatility Friday, with stocks plunging, recovering and then plunging again as investors absorbed another wave of downbeat economic news. Hedge fund selling in advance of a Saturday deadline contributed to the market’s gyrations, which set back the Dow Jones industrials almost 340 points.

Some retrenchment was to be expected after a big rally Thursday, when the Dow rallied more than 550 points after falling near its lows for the year. But there was plenty of discouraging news for investors to focus on, including comments from Federal Reserve Chairman Ben Bernanke that the markets remain under “severe strain” and a sobering report on October retail sales.

Analysts believe that the market is still searching for a bottom after last month’s huge losses and that the pattern of volatility will continue for some time — selling, even on technical reasons such as looming deadlines for cashing out hedge fund holdings, is still coming against a backdrop of an extremely weak economy.

“Clearly, the trading crowd like hedge funds can take this market in any direction they want to. Anybody looking to build a position is just not confident,” said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co.

The session saw another stream of bad news. Bernanke said during a speech in Frankfurt, Germany, that he would work closely with other central banks to try to alleviate the global financial crisis and left open the door to a fresh interest rate cut. The Fed is scheduled to meet Dec. 16 at its last regularly scheduled meeting this year.

Though Wall Street would like to see another rate cut, many investors aren’t sure, given the litany of bad economic and corporate news, of how effective a rate reduction would be in the near term. Many investors are still trying to assimilate to the idea that the economy’s downturn would be protracted, lasting well into next year and perhaps longer.

“The economic news continues to be very negative,” said Ben Halliburton, chief investment officer of Tradition Capital Management.