FOX Business: The Power to Prosper
Wall Street closed out a chaotic trading session at the lows of the day, extending a global rout that was ignited by weakening economic prospects and burgeoning fears over Europe's financial system.
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The Dow Jones Industrial Average fell 173 points, or 1.6%, to 10,818, the S&P 500 dipped 17.1 points, or 1.5%, to 1,124 and the Nasdaq Composite slipped 38.6 points, or 1.6%, to 2,342. The FOX 50 shed 13.8 points to 814.
Hewlett-Packard (NYSE:HPQ) was a huge drag on the Dow on Friday, plunging 20% to a 6-year low after announcing a major restructuring in which it is mulling spinning off its personal computer business.
However, the selloff broadened toward the end of the trading session: Caterpillar (NYSE:CAT) and IBM (NYSE:IBM) took steep losses as well. Meanwhile, McDonald's (NYSE:MCD) and Wal-Mart (NYSE:WMT) were by far the best-performing components of the Dow.
This selling comes on the heels of the Dow shedding 420 points, or $120 billion in market capitalization, on Thursday after a dismal manufacturing report and a slew of gloomy headlines regarding Europe's banking system worried traders. For the week the blue chips tumbled 4%, the S&P 500 lost 4.7% and the Nasdaq slid 6.6%.
Gold, which is seen as a shelter during tumultuous economic times, has surged 30% this year, and 14% this month alone. The precious metal once again jumped $30.20, or 1.7%, to $1,852 a troy ounce -- a record high.
On the economic front, JPMorgan joined Morgan Stanley and Goldman Sachs in slashing its forecast for U.S. economic expansion on Friday. The bank said that risks to economic growth "are now very clearly to the downside." Wells Fargo joined the club of banks slashing economic forecasts as well.
With no major economic data releases slated for release on Friday, traders paid particularly close attention to headlines from Europe.
Austria, the Netherlands and Slovakia requested collateral for loans made as part of Greece's second bailout package, which is worth $154 billion, and has kept the Mediterranean nation from having to default on its debt. Finland struck a deal with Greece for collateral earlier this week.
The move, according to Ben Critchley, a trader at IG Index, has led market participants to question the strength of the European Union, and added to the risk in the marketplace.
The Greek government is internally forecasting a bigger-than-expected contraction to economic growth, according to a report by Dow Jones, citing sources. The wider contraction will push the country's deficit higher, according to the report, which may pose add to economic and fiscal woes.
There have also been mounting worries over the capital position of European banks. The Wall Street Journal reported on Thursday the Federal Reserve is concerned about European bank issues spilling over into the U.S. There were also reports that the European Central Bank lent an undisclosed bank $500 million, possibly signaling a funding crunch for that bank.
The question of specifically which banks will need additional capital is "under the microscope" and a major market concern, according to Peter Boockvar, managing director at Miller Tabak + Co.
Energy Markets Mixed, Dollar Down
Energy markets were in the green after a rout in the prior session.
Light, sweet crude fell 12 cents, or 0.15%, to $82.26 a barrel. Wholesale RBOB gasoline jumped 6 cents, or 2.1%, to $2.84 a gallon.
In currencies, the euro gained 0.43% on the U.S. dollar, while the greenback slumped 0.33% against a basket of world currencies.
Prices at the pump were stable overnight. A gallon of regular costs $3.59 on average nationwide, down from $3.68 last month, but well higher than the $2.73 drivers paid last year.
Bank of America (NYSE:BAC) is slashing 3,500 jobs, according a report by Reuters, citing a memo.
The English FTSE 100 fell 1% to 5,041, the French CAC 40 tumbled 1.9% to 3,017 and the German DAX slid 2.2% to 5,480.
In Asia, the Japanese Nikkei 225 slid 2.5% to 8,719 and the Chinese Hang Seng skidded 3.1% to 19,400.