Faced with grim signals about the state of the economy, investors sold off stocks Friday, sending benchmark indexes sharply lower and fanning worries that an economic recovery would take time to materialize. The Nasdaq composite index and the Standard & Poor’s 500 index reversed a seven-month winning run, and fell at least 2.5% on the last trading day of the month. The Dow Jones industrial average gave up 250 points, wiping off Thursday’s gains, as all its 30 components ended in the red in a broad-based selloff.
Jittery investors on the Street turned to safe havens, sending Treasuries prices higher. A jump in the U.S. dollar index, a six-currency gauge, hurt commodity shares as concerns that stocks are on the verge of a much-anticipated 10-15% correction gained ground. The market’s measure of volatility, the CBOE Vix, surged 24%, indicating the increasing nervousness about the strength of the seven-month old rally.
This morning, after a surprise profit from Ford (NYSE:F), stock futures rose moderately, and Wall Street is likely to open with modest gains even as traders await key reports on manufacturing and housing. Ahead of the market’s open, Dow Jones industrial average futures rose 48 points, or 0.5%, to 9,712. Standard & Poor’s 500 index futures added 5.30 points, or 0.5%, to 1,038.30, while Nasdaq 100 index futures advanced 4.25 points, or 0.3%, to 1,669.75.
Shares in Alcoa Inc (NYSE:AA) and Home Depot (NYSE:HD) fell at least 4.4% after new home sales recorded an unexpected decline in September. D.R. Horton (NYSE:DHI) plunged 12%. CIT Group (NYSE:CIT) plunged 24% on bankruptcy concerns as billionaire investor Carl Icahn agreed to support its prepackaged bankruptcy plan. CIT was a notable decliner among the financial shares. Leading the Dow average lower was Bank of America (NYSE:BAC), which shed 10% to $14.58 after Dick Bove of Rochdale Securities noted the bank will have to sell equity to pay back the government. JPMorgan Chase & Co. (NYSE:JPM) declined 7.7% to $41.77, and Morgan Stanley (NYSE:MS) fell 8.2% to $32.12.
This week 96 of the S&P 500 companies are scheduled to report their earnings. Notables include Kraft Foods Inc. (NYSE:KFT), Cisco Systems (NASDAQ:CSCO) and MasterCard Inc. (NYSE:MA).
