Stocks and commodities fell sharply Friday amid anxiety that China will hike interest rates to keep its economy from overheating. The Dow Jones Industrial Average ($INDU) slumped as much as 139 points at one point in the session as gold and oil prices likewise plunged.

The blue-chip Dow closed down 91 points, or 0.8%, at 11,193. The broader S&P 500 ($SPX) lost 14 points, or 1.2%, to settle at 1,199. The tech-heavy Nasdaq Composite ($COMPX) shed 37 points, or 1.5%, to 2,518.


The selling started overnight when Asian markets tumbled on concern the Chinese central bank would tighten monetary policy to combat rampant inflation. The Chinese benchmark Shanghai Composite index plunged more than 5%, its worst drubbing in 14 months.

The prospect of reduced demand from China slammed commodities across the board, and hurt materials and energy stocks particularly hard. Alcoa (AA), ExxonMobil (XOM) and Chevron (CVX) were among the Dow's worst performers. Oil closed down $3.21, or 3.7%, at $84.60 a barrel on the Comex division of the New York Mercantile Exchange (NYX). Gold futures slumped $34, or 2.5%, to close at $1,369 an ounce on the Comex.

In economic news, the best reading on consumer sentiment in five months did little for traders' spirits. The Thomson Reuters/University of Michigan reading on consumer sentiment came in at 69.3 in November, up from 67.7 in October and slightly higher than economists' expectations.

Stocks hit their worst slump in three months this week, but Friday's selling was more of a knee-jerk reaction to what happened in Asian markets overnight than a change of direction for traders, says Joe Greco, managing director at Meridian Equity Partners.

"The markets rallied into the mid-term elections and quantitative easing last week," Greco says. "This week's action and Friday's action is still part of the process of selling the news."

For more on Greco's take from the floor of the New York Stock Exchange (NYX), see the video above.

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11 Comments

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bootjack

Goober-smooching Barry attempts at diplomacy was a total failure.

November 12 2010 at 7:46 PM Report abuse rate up rate down Reply
bootjack

Obama was passed around like a cue ball in a Billiards competition

November 12 2010 at 7:44 PM Report abuse rate up rate down Reply
amani4000

Yesterday AOL posted oil prices were up due to low US reserves, Hmmmm? We are getting hosed from every angle folks, hold on TIGHT. P.S. My Mattress makes a nice bank, at least I can stop the thieves before they hop in!!

November 12 2010 at 7:30 PM Report abuse +1 rate up rate down Reply
Darrell & Donna

maybe obama hussian should keep his butt home and do some work;; it sound like he is still running for office;;please someone tell him and his wife to stay in DC;;

November 12 2010 at 7:16 PM Report abuse +3 rate up rate down Reply
dllr193

Investors need to worry less about China and more about the incoming Republicans. Hold on tight it's going to be a bumpy ride down.

November 12 2010 at 7:01 PM Report abuse -5 rate up rate down Reply
tomorrow2011

thats because china calls the shots for the democrats !

November 12 2010 at 6:40 PM Report abuse +2 rate up rate down Reply
tomorrow2011

maybe obama should have offered kim jun ill a vice presidents possition and remove biden for some trillion dollar municipal union stimu-less eq4 bill, for selling america to north korea ?

November 12 2010 at 6:27 PM Report abuse rate up rate down Reply
tomorrow2011

isnt it great, barry is in his multi billion eat lobsters at foreign nations, begging for export business, no respect to the troops, printing more IOU bogus dollars.

November 12 2010 at 6:23 PM Report abuse -2 rate up rate down Reply
ultraz2

This is a good thing, now maybe bussiness will spend more money in USA instead of sending our money to China

November 12 2010 at 5:30 PM Report abuse +1 rate up rate down Reply
1 reply to ultraz2's comment
regalcrusader

china refuses to by our bonds and chastised obama for devaluing our currancy. s. korea refused to sign a trade ageement with us.... and you think this is a good thing?

November 12 2010 at 6:07 PM Report abuse +1 rate up rate down Reply
Robert & Lisa

George Soros's Obama and thugs strike again.

November 12 2010 at 5:08 PM Report abuse +6 rate up rate down Reply