Stocks fell sharply Friday as investors fled to safety amid disappointing economic data, mixed corporate earnings reports and escalating violence in Egypt.
The Dow Jones Industrial Average ($INDU) fell 166 points, or 1.4%, to close at 11,823. The broader S&P 500 ($INX) declined 23 points, or 1.8%, to finish at 1,276. The tech-heavy Nasdaq Composite ($COMPX) tumbled 68 points, or 2.5%, to settle at 2,687.
A soft start for equities only got worse as the day progressed as traders pulled money out of riskier assets for the relative safety of gold and the dollar.
Gold traded on the Comex division of the New York Mercantile Exchange (CME) rose $17, or 1.3%, to finish at $1,337 an ounce. The U.S. Dollar Index, which measures the greenback against a trade-weighted basket of six major currencies, added 0.6%. Middle East instability caused benchmark crude oil to spike $3.84, or 4.5%, to $89.47 on the Comex.
Friday's economic data failed to impress the Street, especially after Thursday's disappointing jump in initial unemployment claims. Gross domestic product grew at an annualized of 3.2% in the fourth quarter, but that was below analysts' average forecast for 3.5% growth. Consumer sentiment for January exceeded estimates but slowed from December as consumers worried about higher fuel and energy costs.
The latest batch of quarterly earnings also prompted investors to take profits. Bellwethers Ford (F), Microsoft (MSFT) and Amazon (AMZN) missed forecasts on either the top or bottom line.
But the biggest catalyst for Friday's broad-based sell-off was escalating violence in the Egyptian capital of Cairo, as throngs of protesters took to the streets in the latest demonstration of anger with governments across the Arab world.
"GDP missed a little bit, but what you saw in the market today is really the geopolitical situation -- not just what's happening in Egypt, but what's happening in the whole region where there seems to be this uprising," says Kenny Polcari, managing director at interdealer broker ICAP Corporates.
"People are cautious, and they took money off the table today because you don't know what could happen over the weekend in the Middle East -- if it could spiral out of control or not," the veteran New York Stock Exchange (NYX) trader says.
For more on Polcari's take from the floor of the NYSE, see the video above.
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