By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks fell hard on Friday, but benchmark indexes still managed to post a third week of
gains, as investors reacted to the uncertain science of reading verbal signals from U.S. central bankers.
The selloff intensified in the last few minutes of trading. Volatility was expected to be high Friday due to an
options expiration known as quadruple witching taking place.
The Dow Jones Industrial Average and the S&P 500 both fell for a second session, retreating from the record heights
that came Wednesday after the Federal Reserve unexpectedly said it would refrain from curbing stimulus for now. On
Monday, stocks rallied in the wake of former Treasury Secretary Larry Summers pulling his name out of contention to
replace Ben Bernanke as chairman of the Federal Reserve.
The final trading session of the week had one Federal Open Market Committee member signaling the Fed could curb
stimulus next month and another critical of the decision not to taper in September.
It has been a "big week if you're a Fed watcher, between Larry Summers and the FOMC meeting, the market was caught off
guard," said Richard Slinn, co-head of investments for Northern California at J.P. Morgan Private Bank. The bank
oversees $910 billion in assets.
The Fed's unexpected decision to hold off on reducing its $85 billion in monthly asset purchases was "aimed more at
Main Street than Wall Street," said Slinn, adding that the Fed wants to ensure its "decisions don't risk the nascent
recovery in the private sector," given the potential impact of rising interest rates on the housing and auto sectors.
In its worst session in more than a month, the Dow Jones Industrial Average (DJI) fell 185.46 points, or 1.2%, to
15,451.09, leaving it up 0.5% on the week.
Aluminum-producer Alcoa Inc. ( AA ) was one of the top three decliners among the Dow's 30 components, its shares down
1.8% on its final day of trading as a blue chip.
Alcoa, Hewlett-Packard Co. (HPQ) and Bank of America Corp. ( BAC ) will no longer be part of the Dow 30 when trading
begins Monday, replaced by Goldman Sachs Group Inc.(GS), Visa Inc. (V) and Nike Inc. (NKE).
Another Dow component, Caterpillar Inc. ( CAT ), fell 3.4% after the heavy-equipment maker in a regulatory filing
reported a decline in retail sales.
The S&P 500 index (SPX) dropped 12.43 points, or 0.7%, to 1,709.91, with utilities losing the most of its 10 major
sectors. It's up 1.3% for the week.
Despite the volatile week, the month is shaping up to be the fifth best September ever for stocks, according to Howard
Silverblatt, senior index analyst at S&P Dow Jones Indices.
After a halt in trading pending news, shares of Blackberry Ltd. (RIMM) fell 17% after the Canadian smartphone maker
said it would layoff 40% of its global workforce and reported a nearly $1 billion second-quarter loss in an unexpected
early release of its results.
The Nasdaq Composite (RIXF) shed 14.66 points, or 0.4%, to 3,774.73, up 1.4% from the week-ago close.
Apple Inc. ( AAPL ) shares fell 1% as long lines formed at the iPhone maker's retail stores around the globe, with the
latest models of its handsets on sale, starting Friday.
AK Steel Holding Corp. ( AKS ) declined 8% after warning of a wider-than-expected third-quarter loss.
For every stock rising, nearly three declined on the New York Stock Exchange, where nearly 2.1 billion shares traded.
Composite volume topped 5 billion.
Interviewed Friday on Bloomberg Television, Federal Reserve Bank of St. Louis President James Bullard said the
decision not to begin tapering followed weaker economic data, and that a small taper could start in October. Stock
futures fell after he spoke. Read about what some Fed watchers think.
At a business luncheon in New York, Bullard said tapering is more likely if the labor market continues to improve.
Kansas City Fed President Esther George on Friday said markets were ready for reduced stimulus to begin, and the
central bank's failure to follow through on expectations hurt its credibility on Wall Street.
Crude-oil futures(CLV3) lost $1.72, or 1.6%, to $104.67 a barrel and gold futures dropped $36.80, or 2.7%, to $
1,332.50 an ounce on the New York Mercantile Exchange.
The dollar (DXY) gained against the currencies of U.S. trading partners, including the euro (EURUSD) but excluding the
Treasury prices rose, with the yield on the benchmark 10-year note (10_YEAR) down 2 basis points at 2.734%.
A day after rallying to records on the FOMC decision not to taper, U.S. stocks mostly fell Thursday in a consolidation
of the prior day's gains.
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