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 The S&P closed at its lowest level since late May and right at its
200-day moving average, a key technical indicator it has not
breached since late 2012. The moving average also coincides with an
intraday low hit early in August.
The week's selloff had various catalysts, analysts said, though none
were new to the market. Some pinned the slide to concern about the
Federal Reserve's imminent ending of its asset purchases stimulus,
as well as worries about weak economic growth, especially in Europe,
and its effect on U.S. earnings.
Underscoring the headwind that Europe is becoming for economic
growth, Standard & Poor's on Friday lowered France's credit outlook.
The negative action comes after a week of weak data out of Germany,
the continent's largest economy.
Technical indicators were also to blame.
The broad selling "has been more technical in nature," said Brian
Lazorishak, senior quantitative analyst and portfolio manager at
Chase Investment Counsel in Charlottesville, Virginia.
He said the 200-day moving average of the S&P 500, now near 1,905,
"should be a pretty decent support level. You may very well undercut
that somewhat for a few days ... but there's strong support at
1,900."
Chipmakers led the decline on Friday, with the PHLX semiconductor
index <.SOX> down 6.9 percent, the most for any day since January
2009, after Microchip Technology <MCHP.O> warned of a broad-based
industry downturn.
Microchip Tech shares tumbled 12.3 percent and the SOX index entered
correction territory, falling as much as 15.4 percent from a 13-year
high hit less than a month ago.
The selling in the sector, and in technology in general, is a play
on the weakness coming out of European economic indicators,
according to John Manley, chief equity strategist at Wells Fargo
Funds Management in New York.
"There was a rise in unfocused fear this week, but fear is getting
more focused," he said, speaking of the gains seen Friday in the
utilities and consumer staples stocks.
The selling had been much broader earlier in the week.
The Dow Jones industrial average <.DJI> fell 115.15 points, or 0.69
percent, to 16,544.1, the S&P 500 <.SPX> lost 22.08 points, or 1.15
percent, to 1,906.13 and the Nasdaq Composite <.IXIC> dropped 102.10
points, or 2.33 percent, to 4,276.24.
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For the week the Dow dropped 2.7 percent. The S&P and Nasdaq, down
3.1 percent and 4.5 percent, respectively, had their largest weekly
drops since May 2012.
The largest percentage gainer on the S&P 500 on Friday was L-3
Communications Holdings <LLL.N>, which rose 6.5 percent, while the
largest percentage decliner was Microchip Tech.
On the Nasdaq 100 the top percentage gainer was Staples Inc
<SPLS.O>, up 1.8 percent, while the largest percentage decliner was
NXP Semiconductors <NXPI.O>, down 12.4 percent.
Among the most active stocks on the Nasdaq were Micron Tech <MU.O>,
down 9.3 percent to $27.79, and Intel Corp <INTC.O>, down 5.1
percent to $31.91.
Declining issues outnumbered advancing ones on the NYSE by 2,426 to
657, for a 3.69-to-1 ratio on the downside; on the Nasdaq, 1,971
issues fell and 729 rose for a 2.70-to-1 ratio favoring decliners.
The benchmark S&P 500 index showed 7 new 52-week highs and 43 new
lows; the Nasdaq Composite recorded 17 new highs and 322 new lows.
More than 9.2 billion shares changed hands on U.S. exchanges, above
the average in the past five days of 7.4 billion, according to BATS
Global Markets data.
(Reporting by Rodrigo Campos; Editing by Nick Zieminski and
Marguerita Choy)
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