Stocks closed sharply lower on Friday, sparked by a wave of last-minute selling by investors reluctant to be in the market over the weekend.
Friday's decline ended a wild week that triggered the biggest weekly loss in the Dow Jones Industrials and S&P 500 in four years.
The Dow skidded 4.2% for the week, while the Nasdaq tumbled 5.9% and the S&P 500 was off 4.4%.
"It seems that people are pointing fingers and blaming the yen, consumer confidence--there was just no good news that came out today to convince people to buy stocks," said Charles Rotblut, senior market analyst at Zacks.com, in an interview with CNBC.com.
"There are a lot of people happy with taking money off the table and waiting until Monday to see how it unfolds," he said.
Marc Pado, U.S. market strategist at Cantor Fitzgerald, expressed a similar sentiment.
"The fear today for traders is that something might happen over the weekend and they'll be caught," Pado told CNBC.com. "It's not worth your risk if you go home for the weekend with a long trading position for any reason. That's part of what's being built in."
Trading was overwhelmingly negative as declining shares outpaced advancers by almost three to one.
All but two components in the Dow closed lower on Friday. Declines in tech stocks pulled down the Nasdaq 1.4%. All ten S&P 500 sectors closed in negative territory, basic materials and energy were the worst-performing sectors, with respective daily declines of 1.7% and 1.6%.
Investor sentiment was affected by a rally in the Japanese yen, which prompted worries that investors would unwind their yen carry trades by selling stocks. Carry trades are popular way for investors, particularly hedge funds, to borrow money cheaply to fund other investments.
"I don't think people necessarily believe the worst is over, but I don't think people believe things are going to get significantly worse from here," said Mike Malone, trading analyst at Cowen and Company.
Treasury prices fell, sending yields higher as investors moved to the safety of the fixed income markets.
"Flight to Safety"
"The first thing that you see after a long run is flight to safety," said Cantor's Pado. "It's pretty clear by the movement of money within the market that people are getting defensive and planning on staying there for awhile."
Handheld device maker Palm saw shares jump 11% on investor speculation of a potential buyout by Nokia .
Dow component Merck closed up slightly after a New Jersey jury issued split verdicts, saying the drugmaker failed to provide proper warnings for painkiller Vioxx in one case -- which it had won previously -- but gave adequate warning in the other. Both cases were being heard simulatenously. Damages for the first trial, if any, will be determined at a later date.
AmericanInternational Group said its fourth-quarter profit rose sharply from a year earlier, but missed analysts' consensus estimates. Shares of the Dow component rose more than 3%, however, as the insurance brokerage giant announced a new $8 billion stock buyback plan and boosted its annual dividend.
Shares of tech heavyweight Microsoft spiked briefly after a federal judge dismissed patent claims made by Alcatel-Lucent, just one week after a jury ordered the world's largest software maker to pay Alcatel $1.52 billion in damages for infringing on audio patents. Alcatel plans to appeal the dismissal. Microsoft shares ended down 1.2%.
Elsewhere in tech, Dell closed higher despite the PC maker 33% decline in quarterly profits. Reinstated CEO Michael Dell said the results were "disappointing."
Subprime mortgage concerns once again weighed on the minds of investors as mortgage lender Countrywide Financial said in an SEC filing that delinquencies rose 19% last year.
Gap shares fell 3% after the retailer reported a drop in fourth-quarter earnings.
In the energy market, New York light crude futures closed at $61.64, failing to stay above $62 a barrel. Shares of integrated oil giants ExxonMobil, Chevron and ConocoPhillips each declined 1.2% or more on Friday.
On the economic front, the University of Michigan said its revised consumer confidence index for February dropped to 91.3 from 96.9 in January, the lowest reading in five months. Economists were expecting the index to remain at the preliminary level of 93.3. The decline reflects a rise in concerns for a slowdown in the economy.
Europe Closes Slightly Down, Japan Declines But Asia Ends Mixed
The Frankfurt DAX and the CAC-40 in Paris both ended with modest declines. The FTSE-100 traded flat as UK fund management firm Schroders announced a pre-tax profit for 2006 of $565.50 million, up from $488.87 million in 2005.
The yen's recent ascent took its toll on the Nikkei 225 Average, which closed with a loss of 1.35%, as Japan's benchmark index closed in the red for the year.
In South Korea, the KOSPI ended marginally lower but touched the lowest level in nearly three weeks. Shares in Shanghai closed higher as the Shanghai Composite Index continued to rebound from Tuesday's 9% plunge.