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Stocks sink again, falling back into the red for the year

Stocks sink again, falling back into the red for the year
Trader Michael Milano works on the floor of the New York Stock Exchange. (Richard Drew / Associated Press)

Stocks are back in the red for the year after another wave of selling hit Wall Street on Friday.

The decline capped an unusually turbulent week of trading that had one solid gain sandwiched between substantial losses.

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A three-week slide has left the benchmark Standard & Poor’s 500 index on track for its worst month since February 2009, which was right before the stock market hit bottom after the 2008 financial crisis.

Longtime market favorites such as Amazon led the way down Friday after reporting weak results. Technology and consumer-focused companies accounted for much of the sell-off.

Media and communications companies, banks and healthcare firms also took heavy losses. Bond prices rose, sending yields lower, as investors sought out less-risky assets.

The S&P 500 is down 9.3% from its September peak — just shy of what Wall Street calls a correction, a drop of 10% or more from a peak. The last S&P 500 correction happened in February.

The stock market has whipsawed this week, with the Dow Jones industrial average slumping 500 points over the first two days of the week, dropping 608 points Wednesday, climbing 401 points Thursday and then sliding nearly 300 points Friday. The ups and downs came during the busiest week for third-quarter company earnings.

“We're going through this transition where, earlier in the year, the corporate earnings results were just a blowout and now they're more mixed,” said David Lefkowitz, senior equity strategist Americas at UBS Global Wealth Management. “That's causing some of this volatility.”

The S&P 500 index slid 46.88 points, or 1.7%, to 2,658.69.

The Dow fell 296.24 points, or 1.2%, to 24,688.31. Earlier in the day, it was down as much as 539 points.

The S&P 500 and Dow are now down for the year again.

The tech-heavy Nasdaq composite dropped 151.12 points, or 2.1%, to 7,167.21. The Russell 2000 index of smaller-company stocks fell 16.58 points, or 1.1%, to 1,483.82.

Stock trading turned volatile in October after a placid summer, with big sell-offs in the sectors that have powered the bulk of the gains during the market's long bull run.

Disappointing quarterly results and outlooks have exacerbated investors' jitters about the growth prospects of corporate profits, a key driver of the stock market.

Traders are worried that rising interest rates and the escalating U.S.-China trade war could hurt the economy and dampen corporate earnings growth.

“There's still uncertainty facing equity investors,” said Gary Pollack, managing director at Deutsche Bank Wealth Management. “And the GDP report this morning showed the economy slowing down from the second quarter.”

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The Commerce Department said the U.S. economy's gross domestic product, a measure of total output of goods and services, grew at a robust annual rate of 3.5% in the July-through-September quarter. That's higher than what many economists had been projecting, but it was lower than the 4.2% growth rate in the second quarter.

Although a sharp increase in personal consumption helped boost the overall GDP reading, there was also an increase in business inventories during the quarter. That could mean companies will be less eager to build up their stockpiles in the fourth quarter, Pollack said.

Amazon and Alphabet slumped after they reported quarterly reported revenue figures that fell short of analysts' estimates. Amazon sank 7.8% to $1,642.81. Alphabet, Google’s parent, fell 1.8% to $1,083.75.

Snap skidded 10.2% to $6.28 after the company said its Snapchat app’s user base shrank for the second quarter in a row.

Mattel slid 2.8% to $13.45 after the toy-maker’s quarterly results fell short of analysts' forecasts.

Colgate-Palmolive sank 6.6% to $59.58 after the maker of consumer products posted less revenue in the latest quarter than analysts expected.

In a bright spot, chipmaker Intel climbed 3.1% to $45.69 after it reported strong quarterly results and raised its outlook.

U.S. bond prices rose. The yield on the 10-year Treasury note fell to 3.08% from 3.13%.

Benchmark U.S. crude rose 0.4% to settle at $67.59 a barrel in New York. Brent crude, the benchmark for international oil prices, rose 0.9% to $77.62 a barrel in London.

Wholesale gasoline rose 0.1% to $1.82 a gallon. Heating oil rose 1.1% to $2.30 a gallon. Natural gas fell 0.5% to $3.19 per 1,000 cubic feet.

The dollar fell to 111.85 yen from 112.61 yen. The euro rose to $1.1412 from $1.1359.

Gold rose 0.3% to $1,235.80 an ounce. Silver rose 0.5% to $14.70 an ounce. Copper fell 0.5% to $2.74 a pound.

Major European stock indexes fell. Germany's DAX slipped 0.9%, while France's CAC 40 dropped 1.3%. Britain's FTSE 100 slid 0.9%. In Asia, Japan's benchmark Nikkei 225 lost 0.4%, while South Korea's Kospi dropped 1.8%. Australia's S&P/ASX 200 was flat. Hong Kong's Hang Seng sank 1.1%.

3 p.m.: This article was updated with closing prices, context and analyst comment.

This article was originally published at 10:15 a.m.

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