U.S. stocks resumed declines in a whipsaw session in which the S&P 500 plunged 3% then erased most of those losses on speculation the European Central Bank will take steps to stem the region's debt crisis.
American Express Co., Cisco Systems Inc. and Hewlett-Packard Co. lost more than 2.2% to lead declines in the Dow Jones industrial average after the 30-stock gauge's intraday plunge of almost 1,000 points on Thursday undermined confidence in U.S. trading mechanisms. Financial shares in the S&P 500 fell 1% after plunging as much as 2.7% in the first hour of trading, then rallying more than 1.6% on speculation the ECB will provide emergency funding to the region's banks.
“It's a confidence crisis,” said Quincy Krosby, chief market strategist for Prudential Financial, which oversees about $667 billion. “You've got yourself in a vortex of negativity in Europe. In the U.S., the investigation of yesterday's trading is definitely an overhang. It's a very precarious scenario. The market is waiting for a viable solution.”
The S&P 500, which sank 3.2% Thursday, lost another 1.53%, dropping 17.28 points to 1,110.87 at the close on Friday. The Dow was off 140.71 points, or 1.34%, to 10,379.60 after tumbling as much as 279 points. The Nasdaq composite index slid 54 points, or 2.33%, to 2,265.64.
The VIX, as the Chicago Board Options Exchange Volatility Index is known, rallied 26% to 41.52 and was poised for the highest close in a year.
All closing figures are preliminary.