By Donna Kardos Yesalavich
The stock market slumped Friday, hurt by selling in the
financial sector on reports of a criminal probe into Goldman Sachs
Group.
Weak earnings and data showing a drop in consumer confidence
also weighed on major indexes, though they managed a partial
afternoon recovery from their session lows.
The Dow Jones Industrial Average (DJI) was off almost 115 points
at its intraday low around 1 p.m. Eastern and recently traded 113
points lower at 11,054, weighed down by declines of more than 3%
each in J.P Morgan Chase Co. (JPM), Bank of America Corp. (BAC) ,
and Caterpillar (CAT).
Goldman Sachs Group, Inc. (GS), which is not a Dow component,
slid 8.8%. It is now down more than 14% for the month of April,
putting the stock on track for its worst month since the fall of
2008.
April has been kind for the market as whole, with major indexes
poised to post their third straight monthly gain. A generally
favorable round of first-quarter profit reports have been the major
catalyst for the gains, but looking ahead, some traders fear that
widening regulatory scrutiny of Wall Street could cool the market
down.
"We're at a point in the rally where you need a continued
increase in participation by individual investors," said strategist
Carmine Grigoli, of Mizuho Securities. "If people think other firms
might be pulled into investigations like this, that could be a
discouraging thing for those investors."
The S&P 500 (SPX) was off 1.3%, led by a 2.2% decline in its
financial sector.
The Nasdaq Composite Index (RIXF) was recently off 1.6%, hurt by
weak earnings from several technology bellwethers. MEMC Electronic
Materials (WFR), which makes silicon wafers for the solar and
semiconductor industries, tumbled 18.5% after the company swung to
a first-quarter loss as overhead costs more than doubled.
McAfee (MFE) slid 11% after it posted a 30% drop in
first-quarter profit as the antivirus-software maker was hit by
currency fluctuations and delays in deal closings.
Consumer stocks were also big losers after the University of
Michigan/Reuters consumer-sentiment index's final reading for April
fell to 72.2, from a final March reading of 73.6.
J.C. Penney Co. (JCP) dropped 5.8%, Abercrombie & Fitch
(ANF) slid 4.7% and Macy's Inc. (M) dropped 6%.
The Commerce Department's report of U.S. economic growth in the
first quarter was relatively upbeat. It estimated the U.S. economy
grew at a 3.2% annual rate in the first three months of the year.
Consumer spending accelerated in the first quarter and the core
inflation rate, which excludes food and energy prices and is
closely watched by the Fed, fell to its lowest number in 51
years.
Crude-oil futures edged up 65 cents to trade near $86 a barrel
as an oil spill in the Gulf of Mexico reached the Louisiana coast.
White House officials said new domestic offshore oil drilling will
be on hold until the investigation of the spill is complete, but
that currently approved oil and gas projects could go forward.
The euro strengthened against the dollar after Greece agreed
with the International Monetary Fund and the European Union to take
additional austerity measures.
Treasurys advanced, pushing the yield on the 10-year note down
to 3.669%. Gold futures rose