Stocks: Worst week in 4 years

Stocks slump Friday at the end of Wall Street's worst stretch since 2003; blue-chip averages down more than 4 percent on week.

By Rob Kelley and Alexandra Twin, CNNMoney.com staff writers

NEW YORK (CNNMoney.com) -- Stocks slumped Friday, at the end of the worst week on Wall Street in four years, as worries about growth at home and abroad caused investors to stage a mass exodus.

Technology and commodity companies were especially hard-hit, but nearly all stocks in the Dow were down by Friday's close.

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The Dow Jones industrial average (Charts) lost 120 points or about 1 percent, while the broader S&P 500 (Charts) index fell 1.1 percent. The tech-fueled Nasdaq (Charts) composite fell 1.5 percent.

The major gauges have fallen for three of the last four sessions.

For the week, the Dow lost 4.2 percent and saw its worst decline on a percentage basis since the end of March 2003.

The S&P 500 lost 4.4 percent for the week, in its worst weekly performance since late Jan. 2003.

The Nasdaq composite lost 5.8 percent this week and saw its worst five-day percentage drop since August 2004.

The major gauges had been on an 8-month upswing that had left the Dow at its highest point ever, and the S&P 500 and Nasdaq at more than 6-year highs.

After such a run up, stocks were vulnerable to a bit of a pullback - and a steep selloff in the Shanghai market Tuesday got the ball rolling.

The selloff in Chinese markets spread to a variety of world markets, including the U.S. - which also got hit by a weak durable goods orders report and hawkish comments from former Fed chief Alan Greenspan on the economy. The Dow ended up losing 416 points Tuesday - registering its biggest one-day point drop since the day the market reopened after the Sept. 11, 2001, attacks.

Stocks barely stabilized Wednesday and then declined anew Thursday and Friday.

Stocks briefly flirted with positive territory near midday Friday, before giving up and falling even more through the close.

"This is a market that's trying to find the bottom," said Art Hogan, chief market analyst at Jefferies & Co. "Until we get global stability, we're going to be hard-pressed to find confidence in domestic markets. Investors will be watching global markets closely next week."

He said that U.S. declines were based on broad-based concern, rather than worries about a specific sector of the economy.

"You have all three broad market indices down similar percentages," he added. "This isn't a sector call; this is a broader market call."

However, after an 8-month rally, a selloff wasn't entirely surprising and not necessarily a sign that the 4-1/2-year-old bull market is dying.

"I think we've seen a correction this week, not the start of something bigger," said Douglas Roberts, managing principal at Channel Capital Research. "We're seeing a lot of fear in the market, yet the fundamental economic conditions haven't changed."

The supportive economic environment - slower, but not too slow growth, paired with declining inflation - should help stocks going forward, although there could be more downside in the short term.

Among stock movers, 28 out of 30 Dow components fell on the session. The biggest decliners were General Motors (down $0.92 to $30.62, Charts), Citigroup (down $1.11 to $49.97, Charts) and JP Morgan (down $1.01 to $48.19, Charts).

Another Dow component, Boeing (Charts), said it had taken the first step toward shutting down production of the C-17 military jet, a move that could cost 7,000 jobs by 2009, due to lack of additional orders for the aircraft.

Dow stock Merck (up $0.20 to $44.19, Charts) managed to end a bit higher, while AIG (up $2.13 to $69.54, Charts) jumped 3.2 percent.

AIG rose after reporting higher quarterly earnings late Thursday that nonetheless missed analysts' forecasts. The financial company also said it would buy back $5 billion in stock in 2007 as part of a broader $8 billion stock buyback plan.

Among tech movers, a variety of stocks declined, including heavily traded companies, such as Cisco Systems (down $0.55 to $25.30, Charts), Intel (down $0.37 to $19.22, Charts), Applied Materials (down $0.47 to $17.98, Charts), eBay (down $1.10 to $30.83, Charts) and Google (down $9.55 to $438.68, Charts).

Novell (down $0.26 to $6.45, Charts) reported a quarterly loss late Thursday, down from a profit a year ago. Analysts were expecting a 1-cent-a- share profit, on average. Shares of the software-maker sank 3.8 percent Friday.

Dell (up $0.17 to $23.18, Charts) inched higher despite its mixed earnings report, released late Thursday. The PC-maker reported lower quarterly earnings that topped estimates on lower quarterly revenue that missed estimates. The company also cautioned that growth and profit margins will be limited during the next few quarters.

Among other gainers, Palm (Charts) rallied 111 percent on reports that the maker of the Treo smart phone could be the subject of a takeover attempt by Nokia (Charts).

Market breadth was negative. On the New York Stock Exchange, losers beat winners 3 to 1 on volume of 1.86 billion shares. On the Nasdaq, decliners topped advancers by almost 3 to 1 on volume of 2.39 billion shares.

Also in focus: comments from Fed speakers. St. Louis Federal Reserve Bank President William Poole, speaking at a business luncheon in Santiago, Chile, said the economy was not headed for a recession.

Poole's comments were in contrast to comments made by former Fed Chairman Alan Greenspan, who said earlier in the week that a recession was possible, though not likely, later this year.

Fed Chairman Ben Bernanke speaks at Stanford University in California this evening.

On the economic front, investors eyed the revised reading on February consumer sentiment from the University of Michigan. The index fell to 91.3 from the originally reported 93.3. Economists surveyed by Briefing.com thought it would hold steady.

In currency trading, the dollar fell modestly versus the euro and more aggressively versus the yen. The yen surged anew as investors continued to close out carry trades, or bets on riskier currencies, bought by borrowing in the currencies of countries with low interest rates, like Japan.

Treasury prices rallied, lowering the yield on the benchmark 10-year note to 4.50 percent from 4.55 percent late Thursday. Bond prices and yields move in opposite directions.

U.S. light crude oil for April delivery fell 36 cents to settle at $61.64 a barrel on the New York Mercantile Exchange.

COMEX gold for April delivery slumped $21 to $644.10 an ounce.


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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.