|Police and unidentified people are seen in the streets during a demonstration in Suez, Egypt.|
NEW YORK ( TheStreet) -- Stocks saw a steep sell-off Friday as anti-government protests in Egypt spooked Wall Street. The pullback put at least a temporary end to the flirtation that's gone on between the Dow Jones Industrial Average and the S&P 500 and their respective psychologically significant levels of 12,000 and 1,300 over the past two sessions. The Dow, which touched 12,000 a few times this week but was unable to close above it, shedding 166 points, or 1.4%, at 11,823. That was its biggest single-day percentage drop since November. The decline also ended the Dow's eight-week long winning streak, with the blue-chip index ending the week lower by 0.4%. The S&P 500 closed lower by 23 points, or 1.8%, at 1276. It peaked above 1,300 both Thursday and earlier Friday before selling off. The Nasdaq Composite came under the heaviest pressure during Friday's session, plunging 68 points, or 2.5%, at 2687 after some technical difficulties. During the morning session, the
Nasdaq failed to update its feed for about 45 minutes because of a dissemination glitch. The S&P 500 and the Nasdaq finished the week with losses of 0.5% and 0.1% respectively. Clashes between the police and Egyptian demonstrators in Cairo intensified on Friday resulting in the deployment of Egypt's military. Protestors, spurred by riots that led to the ousting of Tunisia's president earlier in the month, are rallying against President Hosni Mubarak's 30-year rule. The uncertainty was causing a rebound in the commodity market and the energy sector showed the session's mildest losses. The March crude oil contract added $3.70, or 4.3%, to settle at $89.39 a barrel. The most actively traded April gold contract gained $21.90, or 1.7%, to settle at $1,341.70 an ounce. A disappointing quarterly report from high-flier Ford ( F) also weighed heavily on market sentiment. Shares of the car and truck maker fell sharply after the company reported a 79% drop in fourth-quarter net income. Adjusted earnings came in at 30 cents a share, well short of the profit of 48 cents a share that analysts had forecast. Ford's stock was down by 11.9% at $16.55. The Nasdaq was hit hard by some disappointments in late Thursday earnings reports from Microsoft ( MSFT) and Amazon ( AMZN). Microsoft was the Dow's biggest laggard followed by Home Depot ( HD), Cisco ( CSCO) and Hewlett-Packard ( HPQ). Despite beating estimates, Microsoft reported a slight decrease in net income and Windows sales disappointed some analysts. The stock was off by 4.1% at $27.69.
Shares of Amazon.com ( AMZN) were down 7.9% at $169.91. The
online marketplace operator fell short of fourth-quarter sales estimates and issued disappointing first-quarter guidance. "What we are seeing in the market is some pressure after Ford disappointed. This is just a pause, not a major reversal," said Peter Cardillo, chief market economist at Avalon Partners. "The market has been trying to close above the psychological mark of 12,000 on the Dow and 1,300 on the S&P 500, and that has not been happening. That's causing a bit of profit-taking at this point." However, he added that the crisis in Egypt could be a potential curveball in the week ahead if the problems spread to oil producing countries such as Saudi Arabia.
Earlier investors digested news that the
U.S. economy grew 3.2% in the fourth quarter, according to the Commerce Department's first gross domestic product reading. The growth was slightly weaker than the expansion of 3.7% that economists had forecast, according to Briefing.com. In the third quarter, GDP grew 2.6%. January consumer sentiment came in at 74.2, according to the University of Michigan's final estimate, which was stronger than the 73.2 level that the market had been anticipating and slightly weaker than December's reading of 74.5. Chevron ( CVX) topped analysts' profit estimates by 23 cents with earnings of $2.64 a share, and said revenue rose 9% to $51.9 billion. The stock, however, was down by 1.5% at $93.37. Shares of AT&T ( T) were down 2.3% at $27.53 on a downgrade to neutral from buy at UBS and reductions to the company's estimates and price target at Goldman Sachs. UBS said the company is likely to lose subscribers in the first half of 2011 and Goldman said AT&T is investing heavily to maintain wireless market share. Speculation that the Suez Canal might be shutdown as a result of the crisis in Egypt spurred the stocks of oil tanker companies higher. Shares of General Maritime ( GMR), Frontline ( FRO) and Overseas Shipping ( OSG) surged on Friday on the prospect that those companies might hike their charges if they are forced to circumnavigate Africa in the event of the canal shutdown. Shares of Apache ( APA) also shed 1.3% to $114.07 as it derives 20% of its production and 30% of its revenues from Egypt. The dollar strengthened against a basket of currencies with the dollar index up by 0.5%. The benchmark 10-year Treasury rose 14/32, diluting the yield to 3.335%. . Hong Kong's Hang Seng shed 0.7% and Japan's Nikkei lost 1.1%. London's FTSE dropped 1.4% and the DAX in Frankfurt declined 0.7%. --Written by Melinda Peer and Shanthi Bharatwaj in New York.