Stocks fall for second straight week

June 21, 2013: 4:15 PM ET
S&P 500 4:05
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NEW YORK (CNNMoney)

Thanks a lot, Ben Bernanke!

The Federal Reserve chairman clearly spooked the market this week. Simply hinting that the Fed might wind down its stimulus program later this year was enough to lead to another week of losses.

The three major U.S. stock market indexes ended the week down between 1.8% and 2.1%.

But the Dow Jones Industrial Average and the S&P 500 finished Friday up 0.3%, after spending part of the day down. The Nasdaq closed down 0.2%.

On Wednesday and Thursday, the Dow shed more than 550 points, and stocks stayed on rocky ground Friday.

Related: Fear & Greed Index firmly in extreme fear

Bernanke's words have kept bond yields jumping. The 10-year Treasury yield hit nearly 2.54% Friday.

Investors have been bailing out of bonds and sending yields higher over the past month amid speculation that the Fed will soon taper its monthly bond purchases, known as quantitative easing.

Click here for more on bonds, currencies and commodities

Even after this week's sell-off, stocks are still way up this year. The Dow, S&P 500 and Nasdaq have gained between 11% and 13% since the start of January.

The Fed has been a major driver of the bull market over the past few months as it has injected liquidity into the markets. Traders say the coming shift in monetary policy will mean even more volatility in the months ahead.

The CBOE Market Volatility Index (VIX) was up almost 2% Friday, a day after surging 23%. CNNMoney's Fear and Greed Index remained in Extreme Fear mode.

Related: Don't panic! Selling now could hurt your nest egg

Gold has been hit hard too. The metal bounced back slightly Friday after a sell-off pushed gold below $1300 to its worst level in two and a half years.

European stock markets ended lower, while Asian markets were mixed.

Japan's Nikkei index posted a 1.7% bounce, closing the week with a gain of 4.3%.

But Chinese stocks continued to head lower as investors worried about tighter liquidity conditions across the country and a slump in manufacturing activity.

Nomura analysts said Chinese government policies seem to be the reason for the cash crunch.

"Since mid-March, the government has introduced a series of tightening measures in the shadow banking sector to contain financial risks," they said in a research note. "The People's Bank of China could have reacted and injected liquidity through open market operations. Its decision not to intervene shows that it is committed to tightening the policy stance."

Related: U.S. dollar headed for 'multi-year rally'

In corporate news, Oracle (ORCL) slid 9% after the tech firm reported weak results.

Bad day for Oracle's Larry Ellison

Shares of Facebook (FB) edged higher, one day after the social media giant rolled out its Instagram video product.

Darden Restaurants (DRI), which operates chains including Red Lobster and Olive Garden, reported earnings that missed estimates, but a slightly better-than-forecast revenue increase.

Shares of CarMax (KMX) slumped after the auto retailer missed revenue forecasts, even as it reported better-than-expected quarterly profits.

Inflight wireless company Gogo (GOGO) lost ground on its first day of trading, closing 6% below its IPO price of $17.

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Index Last Change % Change
Dow 16,614.81 215.14 1.31%
Nasdaq 4,419.48 103.41 2.40%
S&P 500 1,941.28 37.27 1.96%
Treasuries 2.21 0.03 1.24%
Data as of 12:57am ET
Company Price Change % Change
Apple Inc 102.47 2.71 2.72%
Bank of America Corp... 16.60 0.34 2.09%
The Coca-Cola Co 40.68 -2.61 -6.03%
Regions Financial Co... 9.26 0.10 1.09%
Yahoo! Inc 40.18 0.90 2.29%
Data as of Oct 21