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The markets closed out a tumultuous trading week with a powerful selloff that accelerated dramatically in the last minutes of trading amid worries about the European debt crisis and the global economy.
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The Dow Jones Industrial Average dipped 137 points, or 1.1%, to 12850, the S&P 500 dropped 17.3 points, or 1.3%, to 1370 and the Nasdaq Composite fell 44.2 points, or 1.5%, to 3011.
Despite posting big gains on Wednesday and Thursday, the markets fell sharply on the week. The Dow shed 1.6%, the S&P 500 dropped 2% and the Nasdaq tumbled 2.2%. It was the worst week of the year for all three major market averages.
The VIX, which some call Wall Street's fear gauge, surged 16.3% on the week as traders grew increasingly anxious about the state of the global economy and the European debt crisis.
Financials tend to be particularly sensitive to developments on the eurozone debt crisis since they can often have a direct impact on the banking sector. Indeed, the financial sector was pummeled on Friday in the worst one-day slide of the year, according to data compiled by FOX Business.
A Bout of Weak Data
China's economy, the second biggest in the world, expanded at an annualized pace of 8.1% in the first quarter, a sharp drop from the 8.9% registered in the last quarter of 2011. Economists were looking for a slightly better reading of 8.4%.
Asian shares managed to shrug off the disappointing data as market participants are already looking forward to the see where growth is headed in the current quarter. Analysts also cited the improving chances the Beijing will act to stimulate growth. Although, some already see improving conditions there.
"Credit and money data suggest that financing conditions are already improving, which should in turn help stabilise economic growth and reduce the need for aggressive stimulus," analysts at Barclays Capital wrote in a note to clients following the report.
On the U.S. front, a survey by Reuters and the University of Michigan showed consumer sentiment unexpectedly ticking lower in April. The gauge came in at 75.7, compared to 76.2 in March. The present conditions sub-index hit the lowest level since last December, but the future expectations portion came in at its highest since September 2009. That may mean that consumers are still bearish about current conditions, yet hopeful about the future.
Prices at the consumer level increased by 0.3% in March, or 0.2% excluding the food and energy components. The results come in-line with Wall Street's forecasts. Data released on Thursday showed there was no change in wholesale prices last month against expectations of a mild pick up.
Eurozone Debt Worries Flare Up
In Europe, traders fretted once again about the chance that a major eurozone nation may not be able to sustain its public debt load. The cost to insure against a Spanish default over the next five years jumped to an all-time high, while insurance costs for Italian debt climbed as well, according to data from London-based Markit.
Spain's IBEX plunged 3.2%, while Italy's MIB tumbled 2.7%. Banking shares, seen as particularly sensitive to sovereign-debt issues, took the worst of the selling pressure.
Strong Corporate Results
Meanwhile, earnings season in the U.S. is revving up. Google (NASDAQ:GOOG) revealed after the closing bell on Thursday a first-quarter EPS that crushed analysts expectations, while revenue came in-line with the consensus view.
JPMorgan Chase (NYSE:JPM), the biggest U.S. bank by assets, weighed in on Friday morning with results that topped forecasts on the top and bottom lines. Wells Fargo (NYSE:WFC) revealed a first-quarter EPS of 75 cents on revenue of $21.6 billion, beating analysts’ expectations of 73 cents on $20.51 billion.
Energy futures ended to the downside. Crude oil traded in New York fell 81 cents, or 0.78%, to $102.83 a barrel. Wholesale New York Harbor gasoline fell by a penny, or 0.32%, to $3.346 a gallon.
In metals, gold dropped $20.40, or 0.42%, to $1,674 a troy ounce.
European blue chips fell 2.8%, the English FTSE 100 dipped 1% to 5710 and the German DAX slumped 2.9% to 6569.
In Asia, the Japanese Nikkei 225 rallied 1.2% to 9638 and the Chinese Hang Seng soared 1.8% to 20701.