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.