JPMorgan Chase & Co., the biggest U.S. bank by deposits, CB Richard Ellis Group Inc., the largest commercial real-estate brokerage and Lennar Corp., the second-biggest homebuilder, fell more than 6 percent. Citigroup Inc. dropped 19 percent, its steepest plunge since July 2002, after Wachovia Corp. agreed to be acquired by Wells Fargo & Co., snubbing a previous plan to sell its banking operations to Citigroup.
The Dow average lost 129.75 points, or 1.2 percent, to 10,353.1 at 3:44 p.m. after earlier climbing to 10,796.26. The S&P 500 declined 12.05 points, or 1.1 percent, to 1,102.23, after earlier rising 3.6 percent. The Nasdaq Composite Index slipped 6.01, or 0.3 percent, to 1,970.71. Almost two stocks decreased for each that rose on the New York Stock Exchange.
The S&P 500 extended its loss over the past five days to 8.3 percent, poised for its steepest weekly retreat since the aftermath of the Sept. 11, 2001, terrorist attacks. The benchmark index for U.S. stocks tumbled 4 percent yesterday as reports on jobless claims and factory orders reignited concern the economy is sinking into a recession.
European stock markets rallied strongly on Friday afternoon to close sharply higher on the day as hopes of a solution to the US financial mess increased.
The FTSE Eurofirst 300 closed 2.9 per cent higher at 1,088.65. Germany’s Xetra Dax climbed 2.4 per cent to 5,797.03 while the CAC 40 index in Paris gained 3 per cent to 4,080.75.
U.K. stocks advanced, led by banks, after Wells Fargo & Co. of the U.S. agreed to buy rival Wachovia Corp. HBOS Plc and Barclays Plc led gains in London. The FTSE 100 Index added 109.91, or 2.3 percent, to 4,980.25, its steepest gain in two weeks. The measure posted a 2.1 percent loss this week.
Japan's stocks fell, capping the worst week in 13 months, on concern demand will decrease in the U.S. after economic reports showed the nation's largest overseas market is faltering. The Nikkei 225 Stock Average declined 216.62, or 1.9 percent, to close at 10,938.14 in Tokyo.
Australian stocks fell, led by mining companies, after commodities prices dropped as reports showing a weakening U.S. economy heightened concern a $700 billion bank bailout won't be enough to reverse the global economic slowdown. The S&P/ASX 200 Index fell 1.4 percent to 4,695.40 at the close in Sydney, taking its decline this year to 26 percent.
Indian stocks fell, with the benchmark set for its second weekly drop, as concern grew that a $700 billion U.S. bank rescue plan won't halt a global slowdown. Commodity producers led declines. The Bombay Stock Exchange's Sensitive Index, or Sensex, dropped 316.95, or 2.4 percent, to 12,738.72 as of 12:40 p.m. local time.