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NEW YORK - US stocks dived Friday as euphoria over stronger-than-expected economic growth evaporated in a flood of concern over the strength of the recovery from recession.
The Dow Jones Industrial Average plunged 249.85 points (2.51 percent) to finish at 9,712.73, wiping up its nearly 200 points chalked up a day earlier.
The tech-heavy Nasdaq skidded 52.44 points (2.50 percent) to 2,045.11 and the broad-market Standard & Poor's 500 index retreated 29.92 points (2.81 percent) to 1,036.19.
Month-end profit taking and worries about the financial sector sparked a fierce selloff a day after the government reported gross domestic product rose 3.5 percent in the third quarter after a year of contractions.
"As investors took a second look at the first GDP estimate for the third quarter and contemplated rumors about the financial sector, all three major equity indices fell," said Sara Kline of Moody's Economy.com.
Briefing.com analysts pointed out that 95 percent of the stocks on the S&P 500 had logged losses, "which contributed to the worst weekly loss in five months for the broad-market measure."
"The heady gains that followed a better-than-expected GDP headline number in the previous session proved unsustainable," they said in a client note.
Financial sector jitters surged amid speculation that embattled CIT Group, a major lender to small and medium-sized businesses, would likely file for bankruptcy protection this weekend, analysts said.
The VIX, the Chicago Board Options Exchange's volatility index dubbed the "fear index," shot up 24 percent, the sharpest single-session percentage spike this year, Briefing.com analysts noted.
CIT plummeted 24.21 percent to 72 cents after trading in its shares was briefly suspended.
The major indices remained stuck in negative territory from the opening bell, a day after the steep rally had snapped four consecutive sessions of losses.
The downtrend followed the market's 14-month high in mid-October, when the blue-chip Dow topped the psychological barrier of 10,000 points.
Many analysts noted that the GDP expansion was mainly due to exceptional government measures to stimulate growth that would eventually expire.
Adding to the slide was the end of investment funds' fiscal year Friday, which withdrew some liquidity from the market, analysts said.
The market shrugged off a Commerce Department report that consumer spending dropped 0.5 percent in September and income was unchanged, in line with market expectations, and a private report showing a surprise rise in manufacturing activity in the Chicago region.
Among stocks in focus, Bank of America slumped 7.31 percent to 14.58 dollars, Citigroup shed 5.10 percent to 4.09 dollars and Goldman Sachs lost 4.71 percent at 170.17 dollars.
Oil giant Chevron slid 1.81 percent to 76.54 dollars after reporting third-quarter profit more than halved from a year ago but exceeded market expectations.
Among the gainers, cosmetics group Estee Lauder climbed 3.31 percent to 42.50 dollars. The company published quarterly profit that nearly tripled from a year ago, smashing forecasts, and raised its annual guidance.
Las Vegas Sands rose 2.24 percent to 15.09 dollars after the casino group posted positive earnings, lifted by strong operations in Macau.
The bond market benefited from risk aversion. The yield on the 10-year US Treasury bond fell sharply to 3.392 percent from 3.501 percent Thursday and that on the 30-year bond dropped to 4.236 percent from 4.345 percent. Bond yields and prices move in opposite directions.
- AFP /ls
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