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Capping off its ugliest week in three months, the Dow shed nearly 100 points on Friday as fears that China will need to step in to cool its red-hot economy added to Wall Street’s growing global headache.
The Dow Jones Industrial Average fell 90.52 points, or 0.80%, to 11192.58, the Standard & Poor's 500 dropped 14.33 points, 1.18%, to 1199.21 and the Nasdaq Composite lost 37.31 points, or 1.46%, to 2518.21. The FOX slid 9.15 points, or 1.05%, to 862.74.
The China-fueled wave of selling threw the brakes on the S&P 500's five-week win streak and landed Wall Street in the red for the fourth day of the last five.
Piling onto resurfacing fears about Europe's debt mess, global markets were spooked on Friday by signs that China may need to step in to prevent its influential economy from sparking a spout of inflation. The markets worried that such an intervention would eat into China's voracious appetite for commodities and slow down already-anemic global growth.
Given those concerns, commodities suffered the brunt of the damage, with crude oil sinking 3% and economically-sensitive copper taking its biggest slide since late June.
“A pullback like this was bound to happen. China just provided the catalyst,” Keith Bliss, a NYSE trader from Cuttone & Co., told FOX Business. “I’m not in panic mode yet.”
Still, the blue chips slumped about 250 points this week, their worst performance since the week ended August 13.
Most of the 30 Dow stocks lost ground on the day, led by economically-sensitive Alcoa (NYSE:AA) and Boeing (NYSE:BA). The index's best performers were Intel (NASDAQ:INTC) and Walt Disney (NYSE:DIS), which bounced back from its earnings-fueled selloff on Thursday.
Despite a dividend hike from Intel, the Nasdaq Composite slumped nearly 1.5% as tech stocks like Dell (NASDAQ:DELL) and Autodesk (NASDAQ:ADSK) declined.
Many market watchers had been bracing for a pullback, especially because the major indexes hit two-year highs last week and had soared as much as 23% from their July lows, without much resistance.
“Given the fact we were overbought in every measure you can imagine, I don’t see this as being overwhelmingly negative for the big picture. I just see this as a likely breather,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald, citing bullish internal market indicators.
The selloff began overseas as the Shanghai Composite plummeted 5.16% -- roughly the equivalent to a 600-point drop on the Dow -- due to worries that China will have to hike interest rates and further tighten bank lending standards to avoid a spike in inflation. Earlier this week a report showed consumer inflation soared 4.4% in October from the year before.
Wall Street remains sensitive to signs that China, the catalyst for much of the global economic recovery, may be overheating. The basic materials sector was the biggest loser in the wake of the China developments, sinking 2.3%. Individual stocks like Freeport McMoRan (NYSE:FCX) and Rio Tinto (NYSE:RIO) slumped even further.
The energy group slid nearly 2%, led by steep drops for stocks like Hess (NYSE:HES) and Transocean (NYSE:RIG).
Hurt by the China fears, commodities took it on the chin. Marking the end to its worst week in almost two months, crude oil tumbled $2.93 a barrel, or 3.364%, to $84.88. Copper plunged 3.22% a pound to $3.8885. Gold posted its steepest one-day slide since July 1, dropping $37.70 a troy ounce, or 2.69%, to $1,365.40.
Wall Street came under additional selling pressure as a rally for the euro, which tends to move in tandem with U.S. stocks, briefly fizzled. After nearly touching $1.38, the euro was up 0.24% to $1.3693 as Wall Street closed.
Europe's common currency pared its gains as Reuters reported that Ireland, which is at the epicenter of the current debt crisis, is in talks to tap a European Union bailout fund. An Irish official told local media the debt-ridden country hasn’t applied for any EU rescue facility. Boosted by the bailout talk, shares of Allied Irish Bank (AIB) surged as much as 17%.
Wall Street’s economic concerns didn't appear to be soothed by the preliminary Reuters/University of Michigan consumer sentiment survey, which rose to a 69.3 reading in November, the highest level since June. Economists had forecasted it would rise slightly less from October’s 67.7 reading.
General Motors may soon be partially owned by China’s largest auto maker. According to The Wall Street Journal, SAIC Motor is close to finalizing a plan to buy a stake in GM when the U.S. auto maker is expected to go public on Wednesday. Sovereign wealth funds in the Middle East and Asia are also on track to buy more than $1 billion of GM shares, the paper reported.
Walt Disney (NYSE:DIS) rallied 5%, reversing a late-day slide from Thursday that had been fueled by the media giant’s worse-than-expected non-GAAP EPS of 45 cents. Disney’s revenue of $9.74 billion also trailed estimates.
Intel (NASDAQ:INTC) raised its quarterly dividend from 15.75 cents a share to 18 cents amid continued strong cash flows. The chip maker and tech bellwether said it is on track to have its best year ever.
IAC/InterActive’s (NASDAQ:IACI) The Daily Beast agreed to merge with Newsweek, which earlier this year was sold by the Washington Post Co. (NYSE:WPO) for $1. Barry Diller’s IAC will take a 50% stake in the joint venture, which will be run by Stephen Colvin. Tina Brown will serve as editor-in-chief of both publications.
Dillard's (NYSE:DDS) soared 10% to 52-week highs after the department store operator reported a stronger-than-expected 80% surge in third-quarter profits and EPS of 22 cents. Dillard's said its sales fell 1.1% to $1.34 billion, but same-store sales rose 1% and gross margins rose by 1.5 percentage points.
Anheuser-Busch InBev (NYSE:BUD) lobbed a lawsuit against Major League Baseball, alleging the league reneged on an agreement to re-up a sponsorship contract, Reuters reported. Anheuser is asking a judge to declare an April agreement between the two sides enforceable. MLB said it has yet to see the suit, but disputed the reports.
D.R. Horton (NYSE:DHI) narrowed its fiscal fourth-quarter loss to 3 cents a share, narrowly topping estimates for a loss of 4 cents a share. Hurt by slumping net sales orders, the home builder said its revenue slid 8.7% to $925.7 million.
J.C. Penney (NYSE:JCP) slumped 3% despite beating the Street with a third-quarter profit of 19 cents a share. Analysts had projected EPS of 17 cents. Net sales inched up just 0.2% to $4.19 billion, trailing forecasts for $4.25 billion.
The U.K.'s FTSE 100 slid 0.32% to 5796.87, Germany's DAX inched up 0.17% to 6734.61 and France's CAC 40 slumped 0.94% to 3831.12.
In Asia, Japan's Nikkei 225 lost 1.39% to 9724.81, Hong Kong's Hang Seng dropped 1.93% to 2422.60 and China's Shanghai Composite plummeted 5.16% to 2985.44.