Investors abandoned blue chips and other large-cap stocks on Friday as a lower-than-expected consumer confidence report fed into Wall Street's fears of an economic slowdown. The selloff overshadowed a technology sector rally prompted by robust earnings from Dell Inc.
Energy and utility stocks bore the brunt of the selling, as the week's sharp decline in oil prices led investors to shift their assets out of these sectors -- which had led the market's gainers for much of the year. Treasury bonds benefited as investors sought less risk, and a few investors still took a chance on the tech sector, which saw a boost from strong earnings by Dell.
Blue chips and other stocks were also held back by the University of Michigan's consumer sentiment index that showed a larger-than-expected drop in confidence. The May index came in at 85.3, substantially lower than the 88.3 expected on Wall Street.
"The consumer numbers out there were very frightening," said Chris Johnson, manager of quantitative analysis at Schaeffer's Investment Research in Cincinnati. "The consumer is in the driver's seat in this economy, and a lot of big names depend on healthy consumer spending."
The Dow Jones industrial average fell 49.36, or 0.48 percent, to 10,140.12. The Dow had fallen more than 100 points in afternoon trading before rallying higher at the close.
Broader indicators were mixed. The Standard & Poor's 500 index was down 5.31, or 0.46 percent, at 1,154.05, while the tech-focused NASDAQ composite index gained 12.90, or 0.66 percent, to 1,976.80.
Wall Street's nervousness was apparent in the Treasury bond market, where investors were turning to safer Treasurys amid lingering concerns following the downgrade of big automakers' debt. The yield on the 10-year Treasury note fell to 4.13 percent from 4.17 percent late Thursday -- the lowest yields since mid-February.
The Dow and S&P 500 finished the week substantially lower, while the tech rally pushed the NASDAQ to a small gain. Despite lower oil prices and a spate of strong economic data, an earnings warning from Wal-Mart Stores Inc enhanced investors' nervousness about the economy, prompting two triple-digit losses for the Dow. For the week, the Dow lost 1.98 percent, the S&P fell 1.48 percent and the NASDAQ gained 0.48 percent.
After falling substantially most of the week, oil prices pushed modestly higher in late trading, with a barrel of light crude settling at US$48.67, up US$0.13, on the New York Mercantile Exchange.
A number of erroneous bids for lightly traded stocks on the NASDAQ Stock Market were reported early in Friday's trading session. Orders executed against those bids -- some as high as US$950 per share for a stock trading in the US$4 range -- were broken and removed from the tape, with the sellers getting their stock back and buyers reimbursed, the NASDAQ said, and the incident will be investigated.
The Russell 2000 index of smaller companies was down 4.87, or 0.83 percent, at 582.02.