A fresh wave of worries pushed US stocks lower on Friday as investors dealt with disappointing earnings in the consumer sector, rising oil prices and the possibility of a nuclear weapon test by North Korea. Stocks finished the week higher, however, on the previous session's strong rally.
Investors worried that disappointing news from consumer retailers and manufacturers, including Maytag Corp and Costco Wholesale Corp, spelled a cutback in consumer spending that could derail a steady flow of profits for corporate America. Rising oil prices -- seen as a tax on consumers -- added to the negativity.
But stocks held to modest losses for most of the session, until The Wall Street Journal reported that the US believed North Korea was preparing for a nuclear weapons test. At that point, the major indexes plunged and investors cashed out despite the previous session's gains, which were the best in two years.
"It's like we keep getting another monkey wrench thrown in, and we're just so quick to sell off on any bit of bad news," said Bill Groenveld, head trader at vFinance Investments. "There's definitely some questionable sentiment here, but if we can get back to having decent earnings, and no more shockers like this Korea thing, we could start getting past this and move higher."
The Dow Jones industrial average fell 60.89, or 0.6 percent, to 10,157.71. Despite gaining 206 points on Thursday, the Dow has seen six losing days, including four 100-point losses, in the last eight sessions.
Broader stock indicators also fell substantially. The Standard & Poor's 500 index was down 7.83, or 0.68 percent, at 1,152.12. The NASDAQ composite index lost 30.22, or 1.54 percent, to 1,932.19.
The market flailed wildly over the last eight sessions, with the Dow losing 374 points last week. Much of the selling was attributed to fears about inflation, which were exacerbated by the Labor Department's report on consumer prices last week, and underscored by the Federal Reserve's "Beige Book" survey -- not generally considered a compelling data point. Analysts said the recent trading illustrates the depth of investors' anxiety, even in the face of generally positive earnings news.
"It's a really strange period of market action. There's no conviction," John Caldwell, chief investment strategist for McDonald Financial Group in Cleveland. "That's why people are grasping at second and third-level economic data, and rumors about geopolitical issues ... Bond yields are all over the place, oil trades like it's a tech stock in 1999 ... Investors are nervous."
But Thursday's strong rally nonetheless made for Wall Street's second winning week in the last three. For the week, the Dow rose 0.7, the S&P gained 0.83 percent, and the NASDAQ added 1.26 percent.
The bond market rallied after Thursday's sell-off, with the yield on the 10-year Treasury note falling to 4.25 percent from 4.30 percent late Thursday. The dollar was mixed against other major currencies, while gold prices were higher.
The Russell 2000 index of smaller companies was down 9.45, or 1.58 percent, at 589.53.