Stocks tumble at end of tough week
Wall Street retreats as investors react to economic reports and GM's dealer closings.
NEW YORK (CNNMoney.com) -- Stocks fell Friday at the end of a down week on Wall Street, the first weekly decline in all three major indexes in 10 weeks, as investors reacted to economic news and word of General Motors' dealership closings.
"I think we needed a technical correction after the previous nine weeks," said Tom Schrader, managing director at Stifel Nicolaus.
"We came pretty far pretty fast and this week has been about taking a breather," he said. "We may see a few more weeks of this, especially now that earnings are over, as we wait for the next catalyst."
Since hitting what many see as a bottom on March 9, stocks have been on a tear. The Dow and S&P 500 rose for eight of the nine previous weeks and the Nasdaq advanced for nine in a row.
But this week was different. Bets that the economy is closer to stabilizing have boosted equities, but worse-than-expected reports on retail sales, housing and employment this week have raised worries that the market has gotten ahead of itself.
Declines were broad based Friday, with 24 of 30 Dow components sliding, led by Chevron (CVX, Fortune 500), Exxon Mobil (XOM, Fortune 500), Boeing (BA, Fortune 500), Caterpillar (CAT, Fortune 500), Merck (MRK, Fortune 500) and Wal-Mart Stores (WMT, Fortune 500).
Automakers: General Motors (GM, Fortune 500) said it is notifying 1,100 U.S. dealers that their contracts will be ending. The company has implied it will eliminate up to 2,600 dealers, or 42% of the total, over the next year. GM shares lost 5%.
Economy: Friday brought reports on consumer inflation, manufacturing and consumer sentiment, among others.
The Consumer Price index (CPI), fell 0.7% in April versus a year ago, the largest annual drop since June 1955, the Labor Department reported. CPI was flat versus March, meeting forecasts. CPI fell 0.1% in the previous month.
The so-called core CPI, which strips out volatile food and energy prices, rose 0.3% after climbing 0.2% in the previous month. Economists surveyed by Briefing.com thought it would rise 0.1%.
The Empire State index, a measure of manufacturing in the New York area, improved to negative 4.6 in May from a reading of negative 14.7 in April. Economists thought it would improve to negative 12.
The University of Michigan's consumer sentiment index rose to 67.9 in May from 65.1 in April, versus forecasts for a rise to 67.
Company news: Six life insurers can now access the government's bailout money, Treasury said late Thursday. The companies are Allstate (ALL, Fortune 500), Ameriprise Financial (AMP, Fortune 500), Hartford Financial Services Group Inc. (HIG, Fortune 500), Lincoln National Corp. (LNC, Fortune 500), Principal Financial (PFG, Fortune 500) and Prudential Financial (PRU, Fortune 500).
JC Penney (JCP, Fortune 500) said Friday that first-quarter profit plunged 79% from a year earlier. However, sales excluding items topped analysts' forecasts. The retailer also forecast full-year earnings in a range that is short of analysts' estimates.
Market breadth was negative. On the New York Stock Exchange, losers beat winners three to two on volume of 1.48 billion shares. On the Nasdaq, decliners topped advancers eight to five on volume of 2.12 billion shares.
Bonds: Treasury prices slumped, raising the yield on the benchmark 10-year note to 3.13% from 3.10% Thursday. Treasury prices and yields move in opposite directions.
Other markets: In global trading, Asian markets rallied and European markets were mixed.
In currency trading, the dollar gained versus the euro and fell against the yen.
U.S. light crude oil for June delivery fell $2.28 to settle at $56.34 a barrel on the New York Mercantile Exchange.
COMEX gold for June delivery rose $2.90 to settle at $931.30 an ounce.