Stocks tumbled Friday, giving back all of the gains from the prior session, as worries about the recovery escalated after a pair of reports on the consumer and as the dollar rallied.
The Dow Jones Industrial Average dropped 249.85, or 2.5 percent, to close at 9,712.73. The Nasdaq shed 2.5 percent and the S&P 500 lost 2.8 percent.
It was the Dow's worst one-day percentage loss since July, which followed its BEST day since July on Thursday, but the index finished flat for the month. The S&P and Nasdaq finished October in the red, snapping seven straight months of gains.
The CBOE volatility index, widely considered the best gauge of fear in the market, shot up 24 percent — its biggest one-day drop since the crisis began in October 2008 — closing out October at nearly 31. With the market's recent rally, the gauge had fallen to near 20.
The sectors that have led the recent rally pulled back today: Financials, materials and energy all lost more than 3 percent today and more than 5 percent for the week.
But declines were across the board amid some unloading by mutual funds. Today is the end of the fiscal year for many funds.
The dollar ralliedtoday; oil fell, finishing the week at $77 a barrel. Gold also pulled back, settling at $1,040.40 a troy ounce.
All 30 Dow components finished lower, led by Bank of America, JPMorgan and Alcoa .
Financials, which were already weak today, took another hit after banking analyst Michael Mayo said Citigroup may have to take another $10 billion in write-downsfor deferred tax assets.
CIT Group is still likely to file for bankruptcy— an announcement is expected Sunday night — despite a last-minute reprieve from Carl Icahn, who offered the commercial lender an additional $1 billion in credit.
This came after CIT reached an agreement with Goldman Sachs to amend a $3 billion loan as part of a plan to restructure debt.
Dow Jones transportation stocks are now down more than 10 percent from their peak in March, a level that technical analysts consider the signal of a correction in the market.
Disappointing data on the consumer got the day off to a weak start: Reuters and the University of Michigan reported their gauge of consumer sentiment slipped to 70.6in a final October reading from 73.5 in September.
And the government said consumer spending fell 0.5 percentlast month while income was flat. Separate reports showed employment costs rose and New York City's economic activity continuing to pick up.
Investors shrugged off an encouraging regional report: Business activity in the Midwest expanded in October to the highest level in more than a year, according to the Chicago purchasing managers' index.
A technical glitch this morning further rattled the market: A flood of erroneous orders at the open temporarily prevented the New York Stock Exchange from disseminating quotes.
On the earnings front, Chevron reported its profit slumped 51 percent but beat expectations as the company pumped more oil out of the ground and prices began to recover.
This came a day after rival ExxonMobilmissed analysts' earnings target.
AIG said on Friday it would not sell its two Japanese insurers.
Intel shares declined, but fared better than much of the tech sector and options action on the stock was heavyamid to optimism about the chip maker's forecast.
A few more techs delivered upbeat outlooks, including Sony, Panasonic and Samsung.
Sony posted a fourth-quarter loss but cut its full-year loss forecast closer to market expectations, while rival Panasonic showed its first profit in three quarters while raising its forecast.
As worries about the economic recovery take root, investors have begun to unwind some of their recovery bets in sectors like tech and consumer discretionary.
Consumer staples were among the week's best performers as investors hunkered down.
Telecoms also fared better than much of the market amid optimism about the smartphone market after Verizon and Motorola this week debuted their new smartphone using the Google operation system. The phone officially launches next Friday.
Despite the weak end to October, Dan Genter of RNC Capital Management said he's bullish on the fourth quarter and into 2010.
"I think we'll actually drive strongly until the end of the year because now ... we're seeing as lean as these companies are, they're going to be able to drive the topline, improve margins," Genter said on CNBC this week. (Watch the video clip.)
Looking at next week, earnings season is winding down but a couple of notable reports, including Ford, Kraft, Viacom, MasterCard, Cisco, Time Warner and Starbucks.
The big drivers in the market next week include the two-day Fed meeting that starts on Tuesday — the market will be looking for any signal of when the Fed may start to tighten its monetary policy. Australia and Norway have already raised rates and some say the European Central Bank, which also meets next week, is thinking about it.
And the October jobs report comes out next Friday — economists expect to see a loss of 175,000 jobs from nonfarm payrolls and for the unemployment rate to tick up to 9.9 percent.
We’ll also get data on pending-home sales, manufacturing, auto sales, the service sector and retail sales.
MONDAY: Pending-home sales; ISM manufacturing index; construction spending; Fed's Tarullo speaks; Earnings from Ford, Clorox, Humana
TUESDAY: Two-day Fed meeting begins; Auto makers report October sales; Madoff accountant hearing; election day; factory orders; Earnings from UBS, MasterCard, Viacom and Kraft
WEDNESDAY: Weekly mortgage applications; ISM services index; weekly crude inventories; Chrysler business plan; Fed statement; Earnings from Comcast, Time Warner, Martha Stewart, Cisco, News Corp., Prudential and Qualcomm
THURSDAY: Retailers report October sales; BOE, ECB statements; weekly jobless claims; Earnings from Toyota, CVS, Sirius, Unilever, CBS, Nvidia and Starbucks
FRIDAY: October jobs report; Geithner speaks; Droid phone launches; wholesale trade; consumer credit; Fed's Duke speaks
Send comments to email@example.com.