By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks fell sharply, after heavy
selling in momentum stocks such as biotechs and Internet companies
on Friday reversed an early rally, sending the Nasdaq Composite to
its worst day in two months.
The markets opened higher following a government report showing
a steady pace of jobs growth, lifting both the S&P 500 and the
Dow Jones Industrial Average to intraday highs. But early gains
soon dissipated.
The Nasdaq Composite (RIXF) fell 110.01 points, or 2.6%, to
4,127.73. Friday's losses resulted in a second weekly loss in a
row. Biotechnology and Internet stocks were the worst hit. The
iShares Nasdaq Biotechnology ETF (IBB), a benchmark for that
sector, fell 4.1%. Shares in Apple Inc. (AAPL), Nasdaq's heaviest
weighted component, were down 1.3%. Facebook Inc. (FB), considered
a momentum play, tumbled 4.6%. The stock is now in bear market,
having fallen 20% from its all-time high set on March 10.
The S&P 500 (SPX) ended the day 23.68 points, or 1.3%, lower
at 1,865.09. The benchmark index eked out a 0.4% gain over the
week. Technology and consumer discretionary sector stocks led the
losses, while investors piled into the defensive utilities sector,
the only one closing higher.
The Dow Jones Industrial Average (DJI) dropped 159.84 points, or
1%, to 16,412.71 but managed to stay 0.5% higher on the week.
Microsoft Corp (MSFT) and Visa Inc (V), down 2.8% and 3.4%
respectively, were leading the losses among the blue chips.
"We are seeing a key reversal, significant retrenchment in risk
in equity markets. For days we saw equities going higher while gold
and oil drifted lower and now this trend has reversed," said Colin
Cieszynski, senior market analyst at CMC markets.
"Traders are stepping back from the highflying stocks like Tesla
and Facebook, which is a bearish indicator. This is a sign that
this rally is tired and is in need of a pullback," he added.
The U.S. created 192,000 jobs in March as hiring rebounded in
the early spring. Hiring in January and February was also stronger
than originally reported. The unemployment rate remained unchanged
at 6.7% as more people went searching for jobs. Economist polled by
MarketWatch expected a gain of 200,000 jobs.
"The report was remarkably consistent with what we have been
seeing in the past year or so, in one word good but not great,"
said Anthony Valeri, investment strategist at LPL Financial.
"Looking at the fed fund futures, this might mean that the Fed
will stay in the game a little longer than anticipated when it
comes to raising rates," he added.
Amazon.com, Pandora, Tesla in bear territory
Among individual stocks, shares in so-called momentum
high-growth stocks dropped sharply, sending some of them into bear
territory. Telsa Motors, Inc (TSLA) fell 5.9%, Pandora Media, Inc
(P) fell 4.9%, Amazon.com, Inc (AMZN) fell 3.2%.
One of the bright spots today, GrubHub Inc. (GRUB) shares rose
31% in their market debut.
Mylan Inc (MYL) shares rose 1.5% after reports that Meda AB
rejected its proposal to combine the two businesses. "All continued
discussions between Meda and Mylan have been terminated without
further actions," said Meda in a statement.
CarMax Inc. (KMX) shares fell 4.2% after fourth-quarter results
fell short of Wall Street forecasts.
Shares of Anadarko Petroleum Corp. (APC) rose 2%, adding to a
14.5% gain on Thursday, after the company agreed to a settle all
claims against its subsidiary Kerr-McGee for $5.15 billion. The
case stems from the bankruptcy of Tronox Inc., which was spun off
from Kerr-McGee before it was bought by Anadarko in 2006.
In overseas markets, European stocks rose slightly, their
ninth-straight gain. Stocks in Asia closed out mostly higher,
though gains were muted ahead of the U.S. data. Gold (GCM4) moved
higher, along with oil (CLK4), while the dollar fell against the
Japanese yen after the jobs report.
More must-reads from MarketWatch:
DoubleLine's Jeffrey Gundlach: Stocks are vulnerable
Charles Schwab, Jack Bogle join the debate on high-frequency
trading
For longtime unemployed, full-time work is elusive
Subscribe to WSJ: http://online.wsj.com?mod=djnwires