Stocks slid on Friday after waning enthusiasm among investors ahead of the holiday weekend overshadowed data showing higher consumer spending and a jump in sales of big-ticket goods last month. A weak bond market also weighed on stocks.
The pair of reports from the Commerce Department was welcome news for the economy. Coupled with a final push of takeover activity in the past few weeks, it showed resolute consumer and corporate confidence, even with questions about how much the economy is slowing.
The Federal Reserve is attempting to orchestrate a soft landing for the economy, reining it in while not interrupting corporate growth. Wall Street is trying to peg the Fed's next move after it left rates unchanged for the past four meetings.
Extremely light volume ahead of the Christmas holiday left the market prone to swings, however. Traders expect a light week after the Christmas holiday tomorrow, when markets are closed.
"Looking at the tape, you're going to see stocks just wallow around because of lack of interest," said John O'Donoghue, co-head of equities for Cowen & Co. "It is before Christmas, and it will be a very light day in the marketplace where most of the participants are going to be out early, and next week will be light as well."
The Dow Jones industrial average fell 78.03, or 0.63 percent, to 12,343.22. Blue chips are backing off record levels seen earlier this week.
Broader stock indicators also dipped. The Standard & Poor's 500 index was down 7.54, or 0.53 percent, at 1,410.76, and the NASDAQ composite index fell 14.67, or 0.61 percent, to 2,401.18.
For the week, the Dow fell 0.82 percent, while the S&P slipped 1.14 percent and the NASDAQ tumbled 2.28 percent. The Russell 2000 fell 11.89, or 1.50 percent, to end at 780.82.
Speculation that a weaker housing market and a slowing economy would give the Fed more leeway to cut interest rates next year caused bonds to fall. The yield on the benchmark 10-year Treasury note rose to 4.59 percent from 4.55 percent late on Thursday, while the 30-year bond rose to 4.76 percent from 4.70 percent on Thursday.
The dollar was mostly higher against other major currencies, while gold prices edged higher. A barrel of light sweet crude fell US$0.25 to US$62.41 on the New York Mercantile Exchange.
Traders focused on the technology sector after positive earnings reports from Research in Motion Ltd, Red Hat Inc, and Micron Technology Inc.
Blackberry maker Research in Motion reported third-quarter profit that surpassed Wall Street projections, pushed higher by sales of new products. Shares fell US$3.70, or 2.8 percent, to US$130. The company predicted fourth-quarter earnings in a range of US0.92 per share to US$0.99 per share versus analysts' forecast of a profit of US$0.98 per share.
But Micron Technology rose US$0.45, or 3.3 percent, to US$13.94 after the chip maker reported that quarter profit tripled.
Red Hat surged US$4.50, or 25.1 percent, to US$22.46. The maker of computer operating systems reported third-quarter earnings that exceeded analysts' expectations, and was able to deflect competition from Oracle Corp.
Rupert Murdoch's News Corp will swap its controlling stake in the satellite TV broadcaster DirecTV Group Inc with Liberty Media Corp in exchange for Liberty's 16 percent stake in News Corp. News Corp fell US$0.12 cents to US$22.40, while Liberty Media added US$4.23, or 4.5 percent, to US$97.87.
The Russell 2000 index of smaller companies was down 2.08, or 0.27 percent, to 780.82.
Advancing issues barely outnumbered decliners on the New York Stock Exchange, where consolidated volume came to 1.65 billion shares, compared to 2.32 billion shares at the same point on Thursday.
The Dow Jones industrials ended the week down 102.30, or 0.82 percent, to finish at 12,343.22. The S&P 500 index was down 16.33, or 1.14 percent, to end the week at 1,410.76. The NASDAQ fell 56.02, or 2.28 percent, to finish the week at 2,401.18.
The Russell 2000 index closed the week down 11.89, or 1.50 percent, to end at 780.82.
The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted index that measures 5,000 US based companies -- ended the week at 14,177.66, down 179.22 points from last week. A year ago the index was at 12,700.27.
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