Stocks declined across-the-board Friday as investor worries about a slowing Chinese economy and debt troubles in peripheral European countries sent materials, energy and other commodities stocks lower.
TheDow Jones Industrial Average fell more than 80 points a day after stocks slumpedin the wake of Cisco's disappointing earnings.
Alcoa , Boeing and Merck led the blue chips lower, while Walt Disney and Intel rose.
The S&P 500 and the Nasdaq fell. The CBOE Volatility Index, widely considered the best gauge of fear in the market, soared above 20.
All key S&P sectors declined, led by materials, energy and financials.
Commodities and commodity-related stocks also fell as investors worried that China may raise interest rates to stem inflation, a move that could hurt global demand for commodities. Shares in China tumbledmore than 5 percent on the news.
In the U.S., spot gold sankbelow $1,400 an ounce to about $1,385, while the price of oil fell from a 25-month highto near $86 on Friday.
Exxon Mobil ,ConocoPhillips and Chevron fell, as did oil services companies Halliburton and Schlumberger .
Despite the market's retrenchment this week, Lawrence Creatura, portfolio manager at Federated Investors, believes stocks remain poised to move higher. Federated has forecasted the S&P will reach 1,350 over the next 12-18 months.
That's because stocks represent an attractive alternative to bonds as the Federal Reserve goes through with its plan to buy $600 billion in long-term bonds to stimulate the economy, Creatura said.
One result of that program is bonds will become even more expensive, and another, is inflation should result. Stocks, unlike bonds, provide inflation protection because most companies pass through added costs to consumers, "so their cash flows can adapt to chasing inflation environments," he said.
"Not so with fixed income, where the word fixed is in the name, and reflects the fact the cash flows coming form those instruments won’t change in nominal terms." In real terms, the cash flows are smaller, he added.
Intel raised its quarterly dividendto 18 cents a share from 17.75 cents. The tech giant said it was on track for its best year ever.
Shares of Dow component Walt Disney rose in pre-market trading, after initially falling late in Thursday's session when the entertainment conglomerate accidentally released earnings before the market closed. After hours, investors focused on the company's upbeat outlook. Disney's profit fell from a year ago, and was a penny shy of analysts' expectations.
Boeing led the Dow lower for a third session after it was downgraded by Sanford Bernstein to "market perform" from "outperform," citing risks with the airline maker's 787 aircraft.
In earnings news Friday, JC Penney's shares fell after news the department store retailer's sales in the third quarter werehurt by a decisionto wind down its "Big Book" catalogue. The company posted better-than-expected profits, however.
D.R. Horton's shares were slightly lower despite reporting a smaller-than-expected loss. The homebuilder cited slowing demand after the expiration of the homebuyer tax credit.
The Wendy's/Arby's Group sank after reporting a loss in the third quarter due in part to rising commodity costs as well as weak performance at its restaurant chains.
Nividia's shares soared after the graphics-chip maker said Thursday that sequential revenue will grow more than estimates have suggested. The company, however, reported a 21 percent drop in profits on sliding revenue.
Agilent Technologies also jumped after reporting a strong rise in fiscal fourth-quarter profit.
Meanwhile, Yahoo fell after a report, which it denied,that the Internet company was laying off 2 percent of its workforce. Yahoo did not rule out job cuts.
The market forU.S. Treasurys was volatile Friday morning amid the U.S. Federal Reserve's first long-term bond purchases to boost the economy. The Fed is expected to buy $600 billion in bonds through the middle of next year, beginning with purchases of $6 billion to $8 billionon Friday. Details of the Fed's buying program disappointed investors, causing Treasury prices to slip and yields to rise.
In economic news, the Thomson Reuters/University of Michigan consumer confidence index roseto 69.3 in November, which was better than a reading of 69.0 forecasted among economists surveyed by Reuters. The index was at 67.7 in November.
European markets were slightly lower as European Union authorities sought to calm fears that Ireland would need a Greek-style economic bailout. The dollar was higher against the euro and pound, but it fell against a basket of currencies.
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