Stocks closed mostly lower after a volatile week marked by swinging prices of commodities and currencies, as investors wrestled with the implications of a worsening European debt crisis and a global economic slowdown.
The Dow Jones Industrial Average fell 42.99 points this week, or 0.34 percent, to close at 12,595.75. On Friday, the blue-chip index sank 100.17 points, or 0.8 percent.
JPMorgan and Bank of America, among the blue-chip average's biggest laggards on Friday, were also among the hardest hit financials.
For the week, McDonald's was the best Dow performer, rising 2.6 percent, while Caterpillar was the worst, falling 3.65 percent.
TheS&P 500 fell 2.43 points this week, or 0.2 percent, to close at 1,337.77. On Friday it fell 10.88 points, or 0.8 percent.
Procter & Gamble was the best S&P performer this week, up 2.4 percent, while Citigroup was the worst, falling more than 8 percent.
The Nasdaq rose 0.9 points or 0.03 percent this week, to close at 2,828.47. On Friday, the tech-heavy index fell 34.57 points, or 1.2 percent.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell 7 percent for the week to 17.11.
A rotation into defensive stocks continued this week, as consumer staples and utilities were the best performers.
Stocks began falling fast at mid-afternoon on Friday as the euro fell and the dollar strengthened. Also, bonds rallied, signaling bond investors have “no fear of growth and inflation,” said Brian Battle, vice president of trading at the Chicago-based Performance Trust Capital Partners.
That combined with the fact stocks have risen more than 6 percent so far this year and are fully valued, means stocks are at more risk for downside, Battle said.
“We need more confirming evidence of a recovery and we’re not getting it,” he said.
The dollar rose against a basket of currenciesafter news early in the session that consumer sentiment strengthened, and as the euro began sinking. A rising dollar puts pressure on stocks of companies that benefit from a weaker dollar in overseas sales.
Oil prices settled higher after trading lower much of the session. Despite the rout in commodities earlier in the week, U.S. light, sweet crude settled 2.54 percent higher at $99.65 a barrel, while in London, Brentcrude settled 4.31 percent higher at $113.83.
Meanwhile, goldfell 0.88 percent to $1,493.40 on Friday, and silver silver gained 0.6 percent to $35.01. For the week, gold gained 0.15 percent, while silver fell 0.77 percent.
Contributing to the negative sentiment on Friday was mixed earnings guidance from companies delivering earnings results this week, said Doreen Mogavero of Mogavero Lee, a brokerage.
"I think a lot of people are paying attention to guidance this week," Mogavero said. "There seems to be some concern about the future," she added. "More and more people are talking about the fact the economy is recovering slower than we thought it would."
Citigroup fell even after the bank announced it would resinstate its quarterly stock dividendto one cent a share, payable on June 17.
Yahoo dragged the Nasdaq lower, after Alibaba Group, which is 43 percent owned by Yahoo, restructured Alipay, one of its businesses, without the knowledge of Yahoo or Softbank, another stakeholder.
Rambus was another drag on the tech-heavy Nasdaq, plunging after news that the U.S. Court of Appeals for the Federal Circuit concluded the tech licensing company destroyed documents in patent infringement cases against Hynix Semiconductor and Micron. The cases were returned to district court.
Meanwhile, AIG slumped despite being upgraded to "market perform" from "underperform" at Wells Fargo. AIG is in the process of preparing a secondary stock offering.
Tyco gained after a report in the New York Post that the company is in early-stage talks with Schneider-Electric for a $30 billion takeover, citing sources close to the situation. But a spokesman for Schneider, a French company, denied the report and said no deal was in the works.
In earnings news, Dillard's soared after the retailer reported a 57 percent profit gain and sales and margins improved, while Nordstrom slumped after the department store chain reducing its outlook for the year.
Nvidia , meanwhile, sank after the chipmaker cited worries about competition in PC graphics. Citigroup and Bank of America cuts the company's price target, while Needham cut the company to "hold" from "buy." But FBR raised Nvidia's price target to $23 a share from $22.
In other retail news, Wal-Mart traded flat after the big-box retailer said plans to buy a minority stake in the holding company for Yihaodian, a Chinese e-commerce firm.
Health care stocks got a boost from JPMorgan, which upgraded the sector to "overweight" from "neutral." Agilent , Cigna and Aetna gained.
Elsewhere, Facebookhas admitted that it had secretly hired a PR firm to generate stories critical to the way Google handles privacy.
In initial public offerings news, BATS Global Markets, an electronic exchange for stocks and derivatives, plans to sell stock to the public. The amount of the offering hasn't been determined.
Volume on the consolidated tape of the New York Stock Exchange was 3.4 billion shares, while 899 million changed hands on the NSYE floor.
On the economic front, the Thomson Reuters/University of Michigan preliminary consumer sentiment indexfor May rose to 72.4 from 69.8 in April. Economists surveyed by Reuters had expected the index to rise to 70.
The consumer price index gained 0.4 percentin April, largely due to rising food and energy costs, compared with a 0.5 percent gain in March, the Labor Department said. The result was in line with expectations.
The core CPI, which excludes volatile food and energy prices, rose 0.2 percent in April, up from a 0.1 percent gain in March, the government said. Gasoline prices rose 3.3 percent in April, which accounted for nearly half the rise in the overall CPI.
European shares fell after hawkish commentsby European Central Bank President Jean-Claude Trichet.
And the Greek debt problem continued to unfold, with Greek Prime Minister George Papandreou saying that the current spreads of Greek bond yields over those of other euro zone states were not sustainable in a monetary union.
Meanwhile, European Central Bank Governing Council member Ewald Nowotny said Greece seemed not to have met the terms of its international bailout lately.
On Tap Next Week:
MONDAY: Empire state manufacturing survey, Treasury international capital, housing market index, 13-F filings due; earnings from JCPenney and Lowe's.
TUESDAY: Housing starts, industrial production, JPMorgan shareholder meeting, Shell Oil annual meeting; earnings from Home Depot, Wal-Mart, TJX and Dell.
WEDNESDAY: Weekly mortgage applications, oil inventories, FOMC minutes, Fed's Bullard speaks; earnings from Abercrombie & Fitch, BJ's, Target and HP.
THURSDAY: Weekly jobless claims, existing home sales, Philadelphia Fed survey, leading indicators, money supply, Halliburton shareholder meeting, Intel shareholder meeting, McDonald's shareholder meeting, Sallie Mae annual meeting, LinkedIn IPO; earnings from GameStop, Sears and Gap.
FRIDAY: JCPenney shareholder meeting, Macy's shareholder meeting, Time Warner shareholder meeting; earnings from Ann Taylor
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