NEW YORK (
) -- Stocks finished lower Friday amid heightened concerns that
China will raise interest rates
to combat inflation.
Dow Jones Industrial Average
shed 90 points, or 0.8%, to 11,192. The
slid 15 points, or nearly 1.2%, at 1199, and the
declined 37 points, or 1.5%, to 2518.
The Dow shed 2.2% this week, its largest weekly loss in three months, as investors booked profits following a strong rally ahead of the mid-term elections and quantitative easing. Resurgent concerns on Europe's sovereigh debt crisis, lack of consensus at the G-20 and fears of a China slowdown added to the bearish sentiment. The Nasdaq dropped 2.3% on the week, while the S&P 500 lost 2.2%.
Stocks sold off widely Friday, with basic materials, capital goods and energy shares suffering the steepest losses.
dragged the Dow lower.
were the only gainers on the blue-chip index.
On Thursday, China said its consumer price index rose 4.4% year over year in October, bringing average inflation for the year to 3% -- the government's target. That has increased the likelihood that the country will enact measures to slow economic growth.
On Friday, speculation of a Chinese rate hike weighed on
-- particularly copper -- and hit the shares of related equities.
Freeport-McMoRan Copper & Gold
closed 3.8% lower to $103.92, and
was off by 4.7% at $44.30. Gold mining stocks also were down;
shed 2.3% to $61.36, while
fell 2.2% to $50.72.
In commodity markets, the December crude oil contract lost $2.93 to settle at $84.88 a barrel. The December gold contract plummeted $35.50 to $1,367.80 an ounce.
Adrian Day, who runs an asset management company that invests in global resource markets, says that the correction in commodities is likely to be only temporary. "Most commodity and commodity stocks have moved up very far and very fast. Markets were just looking for an excuse to lock in profits," he said.
Day pointed out that the last time China raised rates, commodity markets saw a short-term blip. That was because commodities had not run up as much, and demand from China continued to stay strong.
Investors are concerned that further rate hikes will at some point start to negatively impact the country's demand for commodities. But Day maintains that China's demand for commodities will remain strong as long as its economy does not derail.
"Whether it grows at 5% or 9%, China's demand for commodity stocks is still significant just because of its size. And we don't have a lot of inventory in say, copper. A year or two ago, there was inventory buildup, so when demand slowed, prices fell sharply. That isn't the case now," Day argued.
Day expects to see some pullback in commodity stocks, but commodities will likely rebound after a short-term correction.
Leaders of the world's major economies at the Group of 20 Summit at Seoul didn't back
the U.S. in its effort to push China to boost its currency. That kept alive the prospect of currency wars as economies resort to devaluing their currencies to boost trade prospects.
Hong Kong's Hang Seng shed 1.9% and Japan's Nikkei lost 1.4% on Friday. European markets were mixed as sovereign debt crises once again loom large in the region. The FTSE in London closed lower by 0.3%, and the DAX in Frankfurt gained 0.2%.
In the U.S., the
embarked on its second round of quantitative easing, buying $7.22 billion worth of Treasuries maturing between November 2014 and April 2016. The Treasury markets were weak, with the 10-year Treasury note slipping 12/32, strengthening the yield to 2.769%.
The dollar traded slightly lower against a basket of currencies, with the dollar index down by 0.09%.
Global concerns over shadowed a positive reading on consumer sentiment.
University of Michigan's Consumer Sentiment Index jumped to 69.3 in November, topping expectations for a reading of 69, according to Briefing.com. That compares to October's level of 67.7.
Intel rose 1.5% to $21.53 after it said it will raise its
Disney's stock gained 5.1% to $37.76, rebounding after after the company missed fourth-quarter earnings expectations. Disney said it plans to increase capital expenditures by $1 billion in 2011.
shed 5% to $11.48 after it posted a quarterly loss after new-home orders fell 21%.
also closed down on the negative report by 4.8% at $7.49.
lost 3.4% to $31.13 after the company issued lower-than-expected fourth-quarter guidance despite its topping profit targets for the third quarter.
shares dropped 3.5% to $63.09 on a downgrade to market perform from outperform at Sanford Bernstein, according to a
said it will purchase a 2% stake in
. Mizuho's stock ticked lower by 2.9% to $3.01, and shares of BlackRock shares gained 1.1% to $173.07.
shares fell 2.8% to $25.61 after a
New York Times
report said the company will likely spin off its quantitative trading group in response to the Dodd-Frank Act, which limits proprietary trading.
jumped 5.1% to $13.26 after the company surpassed analysts' profit expectations and issued better-than-expected fourth-quarter sales guidance late Thursday.
climbed 1.3% to $ 4.67 after
Carl Icahn offered it a $2 billion credit line as he continued to strongly oppose
for the energy company.
disappointed investors with a surprise loss as revenue came in weaker than expected. Shares slipped 1.4% to $4.99.
Coal India is looking to acquire assets of
The Associated Press
reported. Shares of Peabody Energy and Massey Energy were lower by 3.5% and up by 0.2%, respectively.
--Written by Melinda Peer and Shanthi Venkataraman in New York
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.