Turmoil swept through Asian and European markets and then carried over into the United States, where the broader market wavered between gains and losses on Friday before closing down more than 4 percent for the week.
Concerns lingered on Friday about the economy and about the euro zone’s debt troubles, much as they had in previous weeks. But some of the downturn on Wall Street was attributed to technical reasons. Friday, for example, was a day when options contracts expire, an event that can fuel volatility or market moves.
Analysts were also quick to point out that on a day before a summer weekend, low volumes could unfold into a “bleed” toward the end of the trading session — and indeed, what had been a relatively placid trading session in New York turned downward in the final hours.
“Just as importantly, any important policy makers that can come up with anything constructive are on vacation,” said Seth Setrakian, co-head of United States equities at First New York. “So what good news can come over the weekend?”
“So everyone is playing much lighter and much tighter,” he said. “It is very simply the data that has been coming out economically has not been constructive.” At the close, the Standard Poor’s 500-stock index was down 17.12 points, or about 1.5 percent, at 1,123.53. The Dow Jones industrial average was down 172.93 points, or 1.6 percent, at 10,817.65. The Nasdaq was down 38.59 points, or 1.6 percent, to 2,341.84.
The three indexes closed lower for the week. The S.P. was down 4.6 percent, the Dow fell 4 percent and the Nasdaq slid 6.6 percent in the five-day trading period. The steepest declines were on Thursday, when the indexes slipped as much as 5 percent on persistent worries about the economy and Europe’s debt problems. Stocks of companies most susceptible to slow growth and those related to banks have been hit. Technology, financials, and industrials were among the sectors down more than 1 percent on Friday.
“You are still seeing a lot of the economically sensitive names leading us on the way down,” Mr. Setrakian said.
Europe’s major stock indexes ended the day lower. The FTSE 100 in London fell 1 percent and the Euro Stoxx 50, a barometer of European blue-chip stocks, pulled back 2.2 percent. Asian markets were also firmly down.
On Friday, gold continued the sharp ascent it has seen over the last months, demonstrating that nervousness remained intense. Gold futures for August delivery settled at $1,851.50 an ounce, up $32.60.
The Nikkei 225 index in Japan closed down 2.5 percent, and the major market indexes in Singapore and Hong Kong closed down more than 3 percent.
The losses during the day reflected an accumulation of bad news, including feeble economic data in the United States and Europe and signs that some banks were having trouble borrowing on the interbank market. Tension on money markets, which some analysts said was overblown, awoke unpleasant memories of the seizure in interbank lending that followed the collapse of Lehman Brothers in 2008.
“Everybody is taking risk off the table,” said George Rusnak, national director of fixed income for Wells Fargo. “This is probably going to be a trend over the next several weeks. There is not a lot of robust trading going on right now.”
Mr. Rusnak and other analysts again noted that concerns have mounted related to the banking sector, especially with respect to the exposure of American banks to European counterparts.
One drag on the American markets, and specifically the tech sector, on Friday was Hewlett-Packard, which is considering plans to spin off the company’s personal computer business into a separate company and is spending $10 billion on Autonomy, a business software maker. It fell 20 percent, to $23.60.
The benchmark 10-year Treasury bond yields, staying in the same range all day, was virtually unchanged at 2.062 percent.
It had touched record lows below 2 percent in intraday trading on Thursday.
“The growth outlook being hurt in Europe, and the ongoing sluggish data we have seen in the United States is the underlying issue the stock market is trying to grapple with,” Robert S. Tipp, a managing director and chief investment strategist for Prudential Fixed Income, said.
He said the crisis of confidence was evident as investors parked money in cash and into short-term fixed-income assets.
One thing to worry about next week will be whether the European Central Bank can continue to hold down yields on Italian and Spanish bonds. If not, Italian and Spanish borrowing costs might reach the point where they became too expensive, raising the risk of default.
On Friday, Italian bonds and Spanish bonds dipped to 4.96 percent.
Jack Ewing, Julia Werdigier, Bettina Wassener and Hiroko Tabuchi contributed reporting.
Article source: http://feeds.nytimes.com/click.phdo?i=eb345903023dd1892e4439a7b79a7fb1
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