Stocks fell sharply Friday as uncertainty about the government's so-called "bad bank" plan rattled the market.
The Dow Jones Industrial Average shed 148.15, or 1.8 percent, to close at 8,000.86. The S&P 500lost 2.3 percentand the Nasdaq skidded 2.1 percent.
That capped the worst January on record for the market: The Dow dropped 9 percent, while the S&P fell 8.8 percent and the Nasdaq slipped 6.5 percent.
Just to put it in perspective, the second-worst January was in 1916, when the Dow dropped 8.6 percent. Not a good sign if you believe the "January effect" on the market.
There were only two gainers on the Dow this month: IBM, which jumped 8.9 percent, and Kraft, which advanced 4.5 percent.
The bottom of the Dow was, predictably, Bank of America , which dropped 53 percent for the month, and Citigroup , which lost 47 percent as worry about the banks' stability and uncertainty about the stimulus mounted.
A plan to prop up banks could still be announced next week but there is a foggy haze around the so-called "bad bank" plan. There is some speculation that a weekend meeting about it may have been cancelled, while other sources say it's still on.
This just thickened the uncertainty in the market as companies pile on the losses and then announce they are curtailing forecasts until further notice.
This makes it a particularly brutal market to trade in and many traders are scrapping their "buy-and-hold" strategyfor fear that if they don't lock in a profit now, poof! it will be gone.
There was a brief, shining moment today when the market got a lift from a not-horrible GDP report but anxiety over the lack of visibility got the best of the market and the rest of the day was a sea of red.
The 3.8-percent drop in GDPwas better than the 5.3-percent decline expected but let's face it: The way this market is, you can't look back too long or your might get whiplash.
The GDP beat "should be a mild help for the market, but this is for 2008. Nobody cares about 2008, we're talking about 2009 now," Standard & Poor's Chief Economist David Wyss told Reuters.
Alcoa was also among the biggest decliners — today and for the month — as commodity prices tumbled and investors worries about the impact of the slowdown in global growth.
Ditto for Caterpillar , which skidded after Goldman Sachs added CAT to its "conviction sell" list, maintaining that the construction-equipment manufacturer faces a difficult year that could include a 50 percent drop in earnings and a dividend cut.
Caterpillar also announced its second round of layoffs this week, saying it will lay of an additional 2,110 workers at three plants in Illinois. On Monday, the company said it would cut nearly 20,000 jobs and warned of a tough year ahead.
Procter & Gamble dropped 6.4 percent today after the maker of Pampers diapers and Tide laundry detergent met analysts' target of $1.58 a share but saw an unexpected decline in sales.
Amazon.com shares soared 18 percent after the online retailer blew past earnings expectationslateThursday.
Pharmaceutical stocks declined after Swiss drug maker Rochelaunched a hostile $86.50 bidfor Genentech after a previous offer of $89 was rejected.
Next week will bring another big batch of earnings, including reports from Merck , Disney , Kraft and Cisco . A key manufacturing report is due on Monday, auto sales come out on Tuesday, chain-store sales are up on Thursday and Friday is the main event: The December jobs report. Economists expect to see another half a million jobs shaved from the economy.
Next Week:
MONDAY: Personal income; ISM manufacturing index; construction spending; Earnings from Humana, Mattel, Aflac
TUESDAY: Auto sales; pending-home sales; Earnings from Merck, Schering-Plough, Dow Chemical; Motorola, Northrop Grumman, PNC Bank, Disney, Electronic Arts, Met Life and Yum Brands
WEDNESDAY: Weekly mortgage applications; ISM services index; weekly crude inventories; Earnings from Time Warner, Clorox, Kraft, Cisco, Prudential, Sunoco and Visa
THURSDAY: Chain-store sales; weekly jobless claims; factory orders; Earnings from Kellogg, MasterCard, Unilever, Hartford Financial, News Corp
FRIDAY: December jobs report; consumer credit
Send comments to cindy.perman@nbcuni.com.
