Stocks tumbled in the US amid heavy volume on Friday, capping their worst week in at least a year, on account of unease among investors about the sudden retreat in stock prices during the week and concern about Europe’s debt situation. The Dow Jones dropped 1.3% to 10,380, and was off 5.7% for the week. The S&P 500 dropped 1.5% for the session while the Nasdaq closed down 2.3%. All three indexes ended in negative territory year-to-date.
In the Dow, American Express (NYSE:AXP) led declining stocks, down 4.5%, followed by Hewlett-Packard (NYSE:HPQ), off by 3.3%, and Cisco Systems (Nasdaq:CSCO), off 3.1%. Kraft Foods (NYSE:KFT – News) led gainers, up 2.9%. The technology and industrial sectors led declining stocks in the S&P 500 index, off more than 2% each.
Goldman Sachs (NYSE:GS) was a notable exception in the sell-off among the financials, with its shares rising 0.5% as its executives faced an annual shareholder meeting amid civil and criminal investigations into the company’s mortgage deals.
The stock market’s fear gauge, known as the VIX, rose again on Friday, to 41.62, its first close above 40 since April 2009, and about double its historical average of 19. The index is approximately where it stood last April, as the bull market was gathering momentum.
Apart from the debt woes of Greece, financial advisors note that certain economic indicators critical to the health of the stock market have been improving. Stronger-than-expected corporate earnings suggest that hiring may accelerate later. US employers added 290,000 jobs in April, the most in four years. Consumer spending and retail sales have been healthy, for the most part.
In the currency markets, the US dollar had its best weekly gain since October 2008. On Friday, the US dollar rose 1.1% against the Yen but slipped 1% against the Euro. Earlier on Thursday, the Euro had fallen to its lowest level against the dollar since March 2009. As for movement in the commodity markets, US light crude oil for June delivery dropped $2 to settle at about $75 a barrel. The bond market witnessed further drop in Treasury prices, pushing the yield of the benchmark 10-year note to 3.42%
