The S&P 500 fell 2.6 percent for the week, closing below its 50-day
moving average Friday for the first time since October 9, suggesting
more selling may be ahead for the market that closed out 2013 with a
The day's decline was also the biggest percentage drop since June
2013 for the index, while the CBOE Volatility index <.VIX> rose 32
percent and registered its biggest weekly percentage gain since May
"There's definitely some nervousness. The world is suffering from
the emerging markets' flu," said Michael James, managing director of
equity trading at Wedbush Securities in Los Angeles.
Emerging market assets were hit by worries about slowing growth in
China as well as political problems in Turkey, Argentina and
With many market participants expecting the Federal Reserve to
decide next week to shave its stimulus by another $10 billion a
month, investors also worried that interest rates will soon begin to
rise. Fed policymakers will conclude a two-day meeting on Wednesday.
Among the 10 major S&P 500 sectors, industrials <.SPLRCI> fared the
worst, down 3.1 percent, as General Electric Co <GE.N> lost 3.4
percent to $24.95 and Boeing Co <BA.N> fell 3.3 percent to $136.65.
The Dow Jones industrial average <.DJI> fell 318.24 points or 1.96
percent, to 15,879.11, the S&P 500 <.SPX> lost 38.17 points or 2.09
percent, to 1,790.29 and the Nasdaq Composite <.IXIC> dropped 90.701
points or 2.15 percent, to 4,128.173.
For the week, the Dow fell 3.5 percent and the Nasdaq fell 1.7
percent. The Dow's weekly drop was the steepest since November 2011.
However, investors were willing to pay more for protection against a
drop in the S&P 500 today than three months down the road.
The last time the spread between the CBOE volatility index <.VIX>
and three-month VIX futures turned negative was mid-October, shortly
after a 4.8 percent pullback in the S&P 500 opened the door to the
last leg of the 2013 market rally.
[to top of second column]
Worries over China's growth surfaced after a disappointing
manufacturing number spurred the S&P 500's 0.9 percent drop on
The Turkish lira hit a record low and the South African rand fell
to five-year low against the dollar.
Argentina's government said Friday it would relax stringent
foreign-exchange controls, after it abandoned its long-standing
policy of intervening to support the peso currency. That resulted in
the currency's steepest plunge since the 2002 financial crisis.
Going against the day's downdraft was Procter & Gamble Co <PG.N>,
which advanced 1.2 percent to $79.18, giving the Dow its biggest
boost. The world's largest household products maker reported lower
quarterly profit, but kept its 2014 sales forecast unchanged.
Volume was well above the average for the month. About 8.8 billion
shares changed hands on U.S. exchanges, compared with the average of
6.6 billion so far this month, according to data from BATS Global
Decliners outnumbered advancers on the New York Stock Exchange by
about 6.5 to 1 and on the Nasdaq by about 6 to 1.
(Additional reporting by Chuck
Mikolajczak; editing by Bernadette Baum, Nick Zieminski and Jan
[© 2014 Thomson Reuters. All rights
Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.