After showing a lack of direction in morning trading on Friday, stocks showed another notable move to the downside over the course of the afternoon. The pullback by the markets came as traders were reluctant to hold positions going into the weekend.
The major averages all ended the day firmly in negative territory, at their worst closing levels in four months. The Dow fell 73.11 points or 0.6 percent to 12,369.38, the Nasdaq plunged 34.90 points or 1.2 percent to 2,778.79 and the S&P 500 slid 9.64 points or 0.7 percent to 1,295.22.
With the losses on the day, the major averages all fell sharply for the week. The Dow dropped by 3.5 percent, while the Nasdaq and the S&P 500 tumbled by 5.3 percent and 4.3 percent, respectively.
The continued weakness on Wall Street came despite a lack of major catalysts, with the drop reflecting the recent downward momentum for the markets.
Lingering concerns about the financial situation in Europe continued to weigh on the markets, with the ongoing political uncertainty in Greece adding to worries about the outlook for the eurozone.
However, a note from Capital Economics said, "All things considered, we don't expect Greece's eventual exit from the euro-zone to have any devastating impact on the US economy, even if the exit from the single currency is compounded by a Greek banking collapse and/or a further sovereign debt default."
"The trade links are pretty modest," the firm said. "Only 0.1 percent of U.S. exports go to Greece and less than 3 percent go to the five peripheral euro-zone countries combined. The financial links also look to be manageable."
Social networking giant Facebook attracted a lot of attention after making its debut on the Nasdaq in late morning trading. Technical issues delayed the opening by about 30 minutes.
After opening notably higher, shares of Facebook fluctuated over the course of the session, eventually ending the day up by just 0.6 percent.
Meanwhile, shares of Gap (GPS) fell by 2.3 percent even though the apparel retailer reported better than expected first quarter results. The company also raised its full-year earnings guidance.
Chip maker Marvell Technology (MRVL) also ended the day in the red despite reporting better than expected first quarter results, initiating a quarterly dividend of $0.06 per share, and adding $500 million to its share repurchase program.
Most of the major sectors moved to the downside over the course of the day, with significant weakness visible among computer hardware stocks. Reflecting the weakness in the computer hardware sector, the NYSE Arca Computer Hardware Index fell by 2.3 percent to a four-month closing low.
Western Digital (WDC) and Seagate Technology (STX) posted steep losses, while Hewlett Packard also ended the day in the red amid reports that the PC giant plans to cut up to 30,000 jobs.
Biotech stocks also came under considerable selling pressure, dragging the NYSE Arca Biotechnology Index down by 2.2 percent. Sequenom (SQNM) helped to lead the biotech sector lower, tumbling by 10.9 percent on news of the termination of a coverage agreement with Coventry Health Care (CVH).
Semiconductor, health insurance, steel, and airline stocks also posted steep losses, reflecting the broad based weakness that emerged on Wall Street.
In overseas trading, stock saw considerable weakness during trading on Friday following the overnight sell-off on Wall Street. Japan's Nikkei 225 Index tumbled by 3 percent, while Hong Kong's Hang Seng Index ended the day down by 1.3 percent.
The major European markets also moved to the downside on the day. While the U.K.'s FTSE 100 Index slid 1.3 percent, the German DAX Index dropped by 0.6 percent, and the French CAC 40 Index edged down by 0.1 percent.
In the bond market, treasuries recovered from early weakness but ended the day flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, ended the day unchanged at 1.702 percent after reaching a high of 1.743 percent.
Developments overseas are likely to remain in focus next week, although traders are also likely to keep an eye on U.S. reports on new and existing home sales, durable goods orders, and consumer sentiment.
On the earnings front, Hewlett-Packard, Lowe's (LOW), Dell (DELL), Best Buy (BBY), NetApp (NTAP), and Heinz (HNZ) are among the companies scheduled to release their quarterly results next week.
by RTT Staff Writer
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