By Peter McKay
U.S. stocks tumbled Friday, with a reports of a criminal probe
into Goldman Sachs Group and some disappointing tech earnings
dragging the major indexes to their worst week since January.
For the month, the major indexes posted solid gains.
For Friday's session, the Dow Jones Industrial Average (DJI)
ended near its session lows, off 158.71 points, or 1.4%, to
11,008.61. All 30 of its components fell, including declines of
more than 3% each in J.P Morgan Chase (JPM), Caterpillar (CAT),
American Express (AXP), and General Electric (GE).
Goldman Sachs Group Inc. (GS), which isn't a Dow component, slid
9.4%. It ended with a 14.9% decline for April, its worst monthly
drop since the fall of 2008.
Friday's loss helped push stocks to weekly losses. The Dow ended
down 1.8%, breaking a string of 8 weekly gains. The S&P 500
(SPX) fell 2.5%, while the Nasdaq Composite (RIXF) lost 2.7% for
the week.
April was kind for the market overall, with major indexes
posting their third-straight monthly gain. A generally favorable
round of first-quarter profit reports were the major catalyst for
the gains, but looking ahead, some traders fear that widening
regulatory scrutiny of Wall Street could continue to weigh on the
market.
"The market more or less shook off the civil fraud charges
against Goldman earlier in the month," said Jack Ablin, chief
investment officer at Harris Private Bank. "But as you get a
criminal investigation, it begins to feel more like a witch hunt,
and witch hunts tend not to end well for these firms."
The S&P 500 on Friday fell 1.7% to 1186.69, up 1.5% for
April. Its financial sector fell 2.5%, leading a decline that hit
every sector except utilities, which managed a 0.5% gain.
The Nasdaq Composite Index (RIXF) fell 2% to 2461.19, up 2.6%
for the month. It was hurt Friday by weak earnings from several
technology companies.
MEMC Electronic Materials (WFR), which makes silicon wafers for
the solar and semiconductor industries, tumbled 18.6% after the
company swung to a first-quarter loss as overhead costs more than
doubled.
McAfee Inc. (MFE) shares slid 12.1% 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) shares dropped 6.2%, Abercrombie &
Fitch (ANF) slid 5.8% and Macy's (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 98 cents to $86.15 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. The dollar index (DXY) slid about
0.2% for the day but rose for the week and month.
Treasury prices advanced, pushing the yield on the 10-year note
down to 3.661%. Gold futures rose.