By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks finished the week with
deep losses 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 while volumes on Wall
Street on Thursday and Friday were significantly higher than their
30-day averages.
The S&P 500 (SPX) closed below the psychologically
significant level of 1,800 for the first time since Dec. 17,
dropping 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. The index is now 3.1% below its record high,
reached Jan. 15. The trading week was shortened by Monday's Martin
Luther King Jr. Day holiday.
The Dow Jones Industrial Average (DJI) 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 last time the blue chip index
had two consecutive days of triple digit losses were in Dec 11. and
Dec 12.
The Nasdaq Composite (RIXF) lost 90.70 points, or 2.2%, to
4,128.17 and registered a weekly loss of 1.7% after two weeks of
gains. On Friday, the tech-heavy index reversed its early 2014
gains and is now down 1.2% since the start of the year. Read the
recap of the U.S. markets on the live blog
The CBOE Volatility Index (VIX) , known as the Vix, surged 32%,
its steepest rise since the April 15 Boston Marathon bombings.
Investors began selling stocks and emerging-markets currencies
heavily on Thursday following weak Chinese economic data. The sharp
selloffs on Wall Street prompted some analysts to call it the
beginning of a long-awaited correction.
"In 2013 the list of concerns in equity markets really narrowed
and some of them were not even on the radar, but this year some
concerns are back," said Drew Wilson, investment analyst at
Fenimore Asset Management.
"Last year markets gave corporations an amnesty on earnings,
regardless of what they were, but this year corporations need to
prove their profits are sustainable before being rewarded," Wilson
said.
Read: S&P 500 companies are beating estimates at their usual
pace
"Today's drop on the S&P 500 still puts us within 5% of the
record high and this environment is certainly beginning to be good
for value investors, who had a difficult time last year as bargains
were scarce," he added.
"We think the flight to quality will continue, as investors
realize how much profit they have made in the S&P 500 last
year. This kind of selling could well be a spark for the
correction," said Uri Landesman, president at Platinum
Management.
Investors digested earnings results from several heavyweights in
a day with no U.S. economic data. Some earnings provided a bright
spot in an otherwise gloomy session.
Kimberly Clark Corp. (KMB)announced its fourth-quarter earnings
and jumped to $539 million, or $1.40 per share, beating analysts'
expectations. Shares in the consumer-goods company rose 1.9%.
Procter & Gamble Corp.'s (PG) profit fell, but its core
earnings beat expectations. Shares in Procter & Gamble rose
1.2%.
Shares in Care.com (CRCM) jumped 43% on their debut, after the
non-medical-care management company sold shares at $17, the higher
range of its initial offer.
Shares of Microsoft (MSFT)(MSFT) 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 (SBUX) 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 Inc. (HON) shares fell
in a choppy trade and were down 1.5% as the company's quarterly
earnings missed expectations.
Bristol-Myers Squibb Co. (BMY) reversed earlier gains and
dropped 5.6% in spite of the pharmaceutical company reporting a
better-than-expected rise in revenue and earnings.
EBay Inc. (EBAY) fell 1% after Carl Icahn said he is ready for a
proxy fight to win two seats on the board of the online auctioneer,
with the intent of pushing eBay to spin off PayPal.
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