Stocks Tumble on Egypt Crisis, GDP and Earnings [Video]

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.

"Geopolitical Situation"


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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32 Comments

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Sonny

Financial Armagedon is approaching and all the pundits and politicians are telling us nothing is wrong. They tell us not to worry about inflation...........what world are they living in? It is simply a lie to keep our heads in the sand................and for the biggest part.........is working!

January 30 2011 at 12:44 PM Report abuse rate up rate down Reply
renderus

"TOP DOWN, BOTTOM UP, INSIDE OUT" strategy playing out in Egypt right now.

The White House strategy, coming to USA soon.

Van Jones, former White House Green Czar, and still adviser to President Obama.

Van Jones: Bottom up, Top down, and Inside out Strategist.

Perfect example of the "top down bottom up and inside out" strategy soon coming to USA.

George Soros: How much money did you make yesterday?

Bill Ayers: Feeling your goal of destabilizing the Middle East is a step closer?

Van Jones: Bottom Up, Top Down, Inside Out working perfectly in Egypt? Have any of your people on the ground working in the bottom up part?

Barack Obama or should I say Jimmy Carter look alike?

January 29 2011 at 9:36 PM Report abuse rate up rate down Reply
ccdae5

Stay in cash, stocks are topped out and will probably continue their slow decent as fuel prices rise and people close their wallets. Nothing but food and fuel for me. Any extra dollars I have are going to increase my fuel efficiency at home and on the road as inflation and energy and food price increases will be very important concerns for the forseeable future. The FED has all but ensured that.

January 29 2011 at 7:58 AM Report abuse +1 rate up rate down Reply
1 reply to ccdae5's comment
lisak1960

Socialism's lie is that they take from the rich and give to the poor. In fact, socialism destroys the middle class and permits the evil, ultra rich to have all of the wealth and power. That is why the evil, ultra rich George Soros's of the world are backing Obama and the socialist politicians of either party. Want to see our future? Look no further than the long time Socialist government of Mexico.

January 29 2011 at 4:36 AM Report abuse +4 rate up rate down Reply
lisak1960

The liberal socialists are breaking our country and don't even realize how good they have had it here. They'll be sorry when they get what they have been voting for...

January 29 2011 at 4:10 AM Report abuse +3 rate up rate down Reply
Sam Das

This is what I call media madness..sensationalize to sell no matter whose retirement you destroy. What is happening in Egypt is sad but it is still an internal affair for the Egyptians and not foreigners. Demonstrators in that part of the world is never peaceful and if left alone they will burn down Cairo. Trouble makers and oppressive regimes deserve each other.

January 29 2011 at 12:24 AM Report abuse +1 rate up rate down Reply
1 reply to Sam Das's comment
jbluhm1951

Look for the major indexes to pull back strongly next week. Mix earnings, and an economy which is far more "sick" than anyone realizes. Be careful or you will loose your investments in the market. There is no reason for the Dow to be where it is today. The economy is not yet healing, suffering from the tremendous government spending, including the Federal Reserve's spending, will result in a slow economic climate, and the markets may not only re-visit its lows of last year, but may blow past them.

January 28 2011 at 9:15 PM Report abuse +1 rate up rate down Reply
gpfs

It's pretty late in the game, but Obama should today release all oil finds in the U.S. for exploration.

January 28 2011 at 7:47 PM Report abuse +2 rate up rate down Reply
1 reply to gpfs's comment
jackpdca

The people who rave about socialisam on this site are plants of the Republican right, who are hell bent to see Obama fail. Little do they realalize, if it wasn't for government programs we would be in a worse state then we are and need more. Would you like to see what would happen if the poor or unemployed were not given a helping hand, think Egypt, think anarcy and riots, believe me what this country and the Democrats are trying to do is the only solution we have left. Over population will destroy the planet so get ready for some real problems you repub rightist, eliteist prigs.

January 28 2011 at 6:53 PM Report abuse -1 rate up rate down Reply
2 replies to jackpdca's comment
cyberfreddie

jackpdca...Thank you for your insightful summary. The dolts who post here are not used to actually thinking of issues which regard cause and effect. Your a breath of fresh air..a great relief from the hot air usually found here.

January 28 2011 at 7:18 PM Report abuse +2 rate up rate down Reply
gpfs

I guess the discussion needs to be what are the American people willing to pay for. Where does Federal responsibility end and State responsibility begin. What are an individuals reponsibilities?

January 28 2011 at 7:55 PM Report abuse +2 rate up rate down Reply
panuco1

WHAT DO EGYPT HAVE TO DO WITH THE MARKET TUMBLING...EGYPT IS NOT A MAJOR OR MIROR PART OF GLOBAL EARNINGS...

January 28 2011 at 6:08 PM Report abuse -1 rate up rate down Reply
2 replies to panuco1's comment
cyberfreddie

You sir are a dolt. Egypt is a lynchpin for the US in the Arab world.What happens there does effect us.

January 28 2011 at 7:21 PM Report abuse +1 rate up rate down Reply
gpfs

panuco, yave you heard of the Suez Canal?

January 28 2011 at 7:49 PM Report abuse +1 rate up rate down Reply