Indices recorded their worst weekly losses in more than a year
U.S. stocks finished the week with deep losses on Friday, 24 January 2014 as investors fled equities and emerging-markets currencies on concerns about a contagion effect from China's manufacturing slowdown. The S&P 500 and the Dow Jones Industrial Average recorded their worst weekly losses in more than a year.
The Dow Jones Industrial Average dropped 318.24 points, or 2%, to 15,879.11 and lost 3.5% over the week, its worst weekly percentage decline since 2011. The Nasdaq Composite lost 90.70 points, or 2.2%, to 4,128.17 and registered a weekly loss of 1.7% after two weeks of gains. The S&P 500 SPX closed lower by 38.17 points, or 2.1%, to 1,790.29. The benchmark index shed 2.6% over the past week, its worst weekly percentage loss since June 2012.
During the week, Tuesday saw the major averages begin the abbreviated week on a mixed note as the Nasdaq added 0.7% while the Dow Jones Industrial Average shed 0.3%. For its part, the S&P 500 rose 0.3% as eight of ten sectors finished in the green. Stocks began the day with solid gains but the early strength faded quickly when the S&P 500 was unable to extend above the 1850 level during the opening minutes. Adding insult to injury was the fact that mostly better-than-expected earnings reported ahead of the opening bell failed to entice buyers.
The market endured an uninspiring Wednesday session, which unfolded in similar fashion to Tuesday's affair. Once again, the major averages ended mixed with the Dow Jones Industrial Average coming out on the losing end while the Nasdaq and S&P 500 eked out modest gains. IBM plunged 3.3% after beating its earnings estimate by 13 cents on below-consensus revenue. Despite the bottom-line beat, the report was scrutinized due to the company accounting for a lower tax rate than in previous quarters.
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On Thursday, the S&P 500 snapped its modest two-day win streak with its second-largest decline of the month. The index lost 0.9% as nine of ten sectors registered losses. Although stocks sold off throughout the day, the weakness actually started during the overnight futures session when three China-related developments began fueling the risk-off sentiment.
The US market spent the entire session on Friday in a steady slide amid continued concerns regarding China. Furthermore, participants kept a close eye on the foreign exchange market where emerging market currencies weakened while the Japanese yen saw its second consecutive day of gains. The yen strength came about after Bank of Japan officials said the Japanese economy remains on track and there is no need for additional easing at this time.
The weakness began overnight; the aggressive selling did not start until the European session kicked off. Regional indices saw broad losses with peripheral markets leading the slide. Spain's IBEX plunged 3.6% while Italy's MIB fell 2.3%.
Among major stocks, Procter & Gamble's profit fell, but its core earnings beat expectations. Shares in Procter & Gamble rose 1.2%. Shares of Microsoft bucked a weaker tech tone, up 2.1% after the company beat Wall Street estimates with fourth-quarter results released after the market close on Thursday. Shares of Starbucks were up 2.2% after the coffee giant posted a 25% rise in profit, though sales missed Wall Street's targets.
Among the losers, Honeywell International shares fell in a choppy trade and were down 1.5% as the company's quarterly earnings missed expectations.
Crude Oil futures closed lower on Friday, 24 January 2014 but after climbing over the past four sessions in a row, prices were up for the week. Meanwhile, oil prices drew some support from the news that TransCanada started the operation of its Gulf Coast pipeline on Wednesday, pumping crude from the storage hub in Cushing, Oklahoma to refineries in Texas.
March crude oil fell 68 cents, or 0.7%, to end at $96.64 a barrel on Nymex. Prices were up about 2.4% from last Friday's close for the February contract, which was the front-month contract at the time. The March contract rose 2.2% for the week.
Bullion prices ended mixed on Friday, 24 January 2014. Gold prices rose on Friday as losses in U.S. equities helped lure investors to the perceived safety of the precious metal. Prices, however, finished well off the session's high.
Gold for February delivery rose $2, or 0.2%, to settle at $1,264.30 an ounce on the Comex division of the New York Mercantile Exchange. For the week, prices gained 1%. March silver closed down 24.5 cents, or 1.2%, to $19.765 an ounce on Friday but 2.7% lower than last Friday's close.
For the second day in a row, the sell-off was accompanied by above-average volume as 902 million shares changed hands at the NYSE.
Monday's data will be limited to the December New Home Sales report, which will be released at 10:00 ET.
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