Dow Posts Worst Week Since March 2009

Stock finished mixed after a wild session Friday, with the Dow gyrating more than 400 points throughout the day, as investors remained jittery over the state of the global economy.

The Dow Jones Industrial Average finished higher for the day, after swinging more than 400 points and crossing the flatline 16 times throughout the session. The index was up 172 points at session high and down 245 points at its low.

The S&P 500 and the Nasdaq both ended lower.

For the week, the Dow tumbled 5.75 percent, logging its steepest weekly decline since Mar. 2009. Kraft was the only blue-chip stock to finish in the black for the week, while Bank of America sank more than 15 percent.

The S&P plunged 7.18 percent, while the Nasdaq plummeted 8.13 percent, posting their biggest fall since Nov. 2008.

All three major averages are still in negative territory for the year. In addition, all three indexes are also trading in "correction territory," defined by a drop of 10 percent from its peak from their intradays high in Apr. 29. This comes after stocks plunged sharply on Thursday, with the Dow down more than 500 points, in its worst one-day drop since December 2008.

All 10 S&P sectors finished in the red for the week, led by energy, which tumbled more than 10 percent.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, finished above 32.

Volume was at the heaviest level since the day after the Flash Crash in May 2010 with the consolidated tape of the NYSE at 8.18 billion shares, while 2.25 billion shares changed hands on the floor.

“One of the things that concern me is that this is a very sensitive market,” Peter Costa, president of Empire Executions told CNBC. “When news comes out, the market will selloff or trade up in a hurry and I don’t think I’ve seen a market this skittish in a very long time.”

Stocks rallied briefly in the afternoon after Italy said it plans to speed up its fiscal consolidation timetableand introduce a balanced-budget amendment in its constitution, according to Italian Prime Minister Berlusconi.

The announcement followed earlier media accounts that the ECB had agreed to buy Italian and Spanish bonds if key structural reforms were brought forward.

Traders on Thursday had been disappointed that the ECB were buying Portuguese and Irish bonds instead of Italian and Spanish debt.

European shares saw their biggest weekly decline in nearly three yearsamid worries about weak global growth and further contagion in the euro zone debt crisis.

Meanwhile, rumors swirled earlier in the session that S&P is planning on downgrading the U.S.’s credit rating after the markets close Friday.

Bank stocks were the day's biggest laggards led by losses from the likes of Bank of America and Citigroup . BofAslipped after Wells Fargo cut its rating on the financial giant to "market perform" from "outperform."

Among earnings, Procter & Gamble posted better-than-expected earnings as cost cuts and price increases helped mitigate the impact of more expensive materials.

Priceline surged to lead the S&P 500 gainers after the online travel agency reported a higher profit that beat expectations as strong growth at its overseas markets boosted bookings. At least two brokerages raised their price targets on the firm.

On the economic front, hiring picked up in July as the Labor Department reported employers added 117,000 jobs last month and the unemployment rate dipped to 9.1 percent.

Despite the positive data, some experts remained skeptical.

"Come on! Tell me who these new hires are," said Todd Schoenberger, managing director at LandColt Trading. "A number (which still isn't anywhere near normal for a recovery period) surprised like this after the data we received, not to mention the significant layoff announcements we've been hearing about lately, just doesn't seem to add up."

Gold prices surged $20.50 this weekto settle at $1,648.80 an ounce, gaining for a fifth-consecutive week.

On Tap Next Week:

MONDAY: Employment trends index
TUESDAY: NFIB small biz optimism index, productivity and costs, 3-yr note auction, FOMC mtg announcement; Earnings from Disney
WEDNESDAY: Weekly mortgage apps, wholesale trade, oil inventories, 10-yr note auction, treasury budget; Earnings from Macy's, Cisco
THURSDAY: International trade, jobless claims, 30-yr bond auction, money supply; Earnings from Kohl's, Nordstrom, Nvidia
FRIDAY: Retail sales, consumer sentiment, business inventories; Earnings from JCPenney

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