Stocks Log Worst 4-Week Drop Since Mar. 2009

Stocks accelerated their selloff to finish near session lows in light, choppy trading Friday as investors were reluctant to remain in the market ahead of a weekend, amid worries over a global recession in addition to the ongoing euro zone jitters.

All three major averages logged their biggest four-week decline since Mar. 2009, with the S&P tumbling almost 16 percent during the period.

The Dow Jones Industrial Average shed 172.93 points, or 1.57 percent, to finish at 10,817.65.

Hewlett-Packard slumped to a six-year low, plunging 20 percent and dragging the blue-chip index by about 45 points.

The S&P 500 tumbled 17.12 points, or 1.50 percent, to end at 1,123.53. Many traders are now watching 1,101 as the next support level.

The Nasdaq fell 38.59 points, or 1.62 percent, to close at 2,341.84.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, closed above 43.

For the week, the Dow plunged 4.01 percent, the S&P dropped 4.69 percent, while the Nasdaq plummeted 6.62 percent. Wal-Mart was the biggest gainer on the blue-chip index for the week, while HP plunged.

Techs were the biggest sector laggards this week, utilities eked out a gain.

Volume was lighter than usual with the consolidated tape of the NYSE at 5.16 billion shares, while 1.51 billion shares changed hands on the floor.

“The market action today summarizes the week—through all ups and downs, sentiment continues to remain negative,” said Doreen Mogavero, president and CEO of Mogavero Lee & Company. “People don’t want to go home long [equities] ahead of the weekend.”

Stocks started the week with a strong rally, thanks to a handful of M&A activity and amid hopes that European leaders may be close to taking some action to help resolve the ongoing debt crisis.

However, the gains were erased throughout the week as concerns over the global economic growth surfaced, following a flurry of disappointing economic news. In addition, the major concern now is the issues surrounding European financials spilling over into the U.S. banking system.

European stocks finished in the red after already suffering heavy losses in the previous session over fears that euro zone leaders would not be able to contain the debt crisis.

Meanwhile, the French and German Finance Ministers are scheduled to meet in Paris next Tuesday. They are expected to provide detail to the proposals sketched by French President Sarkozy and German Chancellor Merkel earlier this week.

The dollar, plunged to a record low against the yenand oil settled mixed in volatile tradingwith U.S. light, sweet crude dipping 12 cents to settle at $82.26 a barrel and London Brent crude gaining $1.63 to finish at $108.62. Gold settled at a record high of $1,852 an ounce.

Gold mining shares were among the biggest gainers, with Newmont Mining and Goldcorp up almost 3 percent each.

Hewlett-Packarddeclined sharply for a second dayafter the IT giant said it was considering a spinoff of its PC businessand had struck a deal to buy UK software maker Autonomy. In addition, the Dow component also posted earnings that met expectations, but slashed its full-year forecast.

HP's weak forecast comes after rival Dell's lowered its revenue outlook earlier this week that dragged down both stocks. At least two firms lowered their rating on HP, while three firms cut their price target.

Meanwhile, Marvell Technology jumped after the chipmaker posted a surprisingly strong quarter. Intuit soared to lead the S&P 500 gainers after the maker of TurboTax said it expects net income to gain as much as 24 percent for fiscal year 2012.

On an interesting note, Apple is now worth as much as 32 biggest euro zone banks combined.

Clearwire skyrocketed nearly 30 percent amid rumors Sprint is in talks with cable companies about a possible acquisition of Clearwire, according to sources.

On the financial front, Bank of America was lower amid news the bank will cut 3,500 positions, CNBC confirmed, joining the parade of rivals including HSBC that have axed thousands of jobs.

Banks in Europe tumbled near 2-1/2 year lows amid rumors about the financials' potential losses on bonds issued by government debt. Shares of Barclays and Deutsche Bank slumped. The financial sector is down more than 20 percent for the year.

Among retailers, Gap gained even after the CEO warned consumer sentiment may disappoint in the second half of the year and was cautious about future sales growth. Meanwhile, Wedbush cut its price target on the firm to $17 from $19.

Meanwhile, Ann (Ann Taylor) soared after the women's clothing retailer beat earnings and gave an upbeat forecast for the current quarter.

With a lighter-than-usual calendar next week, investors will be closely watching Federal Reserve chairman Ben Bernanke's speech at Jackson Hole next Friday. Investors will watch for any signs of a possible round of asset purchases (also known as quantitative easing) which will likely help bolster the stock market.

"I don’t think [Bernanke's] going to do that,” said Scott Brown, chief economist at Raymond James, implying that further selloff and volatility may be in the cards.

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“There’s not a lot the Fed can do and ‘fiscal stimulus’ is a dirty term in Washington. There is no safety net at this point,” Brown added. “There’s concerns over Europe—possibility of much weaker growth there, concerns about the U.S. economy in the near-term and you may be seeing some slowing down.”

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On Tap Next Week:

MONDAY: Chicago Fed Nat'l Activity Index
TUESDAY: New home sales, Richmond Fed Business Activity Survey, 2-Yr Note Auction; Earnings from Heinz
WEDNESDAY: Weekly mortgage apps, durable goods orders, oil inventories, 5-yr note auction; Earnings from Toll Brothers, Applied Materials, TiVo
THURSDAY: Weekly jobless claims, 7-yr note auction, Medtronic shareholders mtg, USDA food prices outlook; Earnings from Hormel, Pandora
FRIDAY: GDP, corproate profits, consumer sentiment, Bernanke speaks, short-sale bans expire; Earnings from Tiffany

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