Wall Street marked a 4th week of losses, pulled lower by a 20% plunge in Hewlett-Packard -- its worst day because the 1987 market crash -- after the Silicon Valley icon unveiled a dismal outlook along with a difficult corporate shake-up.
The benchmark S&P 500 index has shed 13. 1% to date in August and is on track for its worst month since Oct 2008, when the financial crisis and deep recession mauled markets.
The day's activity seemed mild in comparison with Thursday, when the yield on 10-year US government bonds plummeted below 2% for the very first time since at least 1950 on fears the US economy was careening toward a brand new recession.
Those fears appear valid. Bill Gross, manager of the world's biggest bond fund at PIMCO, told Reuters Insider that the week's rally in Treasury yields signalled "not merely a potential for a recession but the almost high probability of recession. inch
The Dow Jones industrial average closed down 172. 93 points, or 1. 57%, from 10, 817. 65. The Standard & Poor's 500 Index fell 17. 12 factors, or 1. 50%, at 1, 123. 53. The Nasdaq Composite Index dropped 38. 59 points, or 1. 62%, at 2, 341. 84.
Investors stopped a rush into bonds but kept pouring into gold, which posted its biggest one-week gain in 2-1/2 years and remains on the right track for its biggest one-month rise in nearly 12 years in August. Bullion is up 30% to date this year.
While rising commodity prices sapped some safe-haven buying of precious metal, it has gained 6% over the past five days.
"Right now, precious metal is inversely correlated with fear and nothing else. When stocks are lower, gold's up, " said Frank McGhee, head precious metals trader at Incorporated Brokerage Services LLC.
Spot gold shot to a record $1, 877 an ounce on volume which was the week's highest but below last week's pace.
US gold futures with regard to December delivery settled up $30. 20 at $1, 852. 20 an oz.
Commodity prices rebounded after the US dollar plumbed a record low from the yen on speculation Japanese authorities will not intervene too much to stop the yen's surge.
The dollar fell as low as 75. 941 yen upon trading platform EBS, but later pared most losses. It last traded from 76. 500 yen, down 0. 1%.
Currency traders were emboldened by a Wall Street Journal report citing Japan's best currency official as saying Japanese authorities do not plan to intervene on the market often.
The dollar's slump turned commodity markets, where crude oil prices flower about 2% at one point. ICE Brent October crude closed up $1. 63 from $108. 62 a barrel. US crude oil settled down 12 cents from $82. 26 per barrel.
The US dollar index slipped 0. 4% in order to 73. 976. The euro was up 0. 4% at $1. 4392.
US stocks in the beginning see-sawed but turned lower by midday as European stocks closed down upon recession fears and skittishness about regional bank funding in Europe.
"What I'm seeing at this time is basically a crisis of confidence, more-so than an economic crisis or financial crisis necessarily at this time, " said Natalie Trunow, chief investment officer of equities at Calvert Expense Management in Bethesda, Maryland, which manages about $14. 8 billion.
MSCI's all-country globe stock index was off 1. 6%, while emerging markets stocks fell two. 5%.
European shares flirted with two-year lows. The FTSEurofirst 300 index associated with top European shares closed down 1. 7% at 909. 79.
US Treasury yields inched up from the low of 1. 97% on Thursday as some investors took profits.
The benchmark 10-year US Treasury note was up 1/32 of the point in price to yield 2. 06%.
Yields have dropped about 73 basis points about the 10-year note in August as disappointing economic data, the Federal Reserve's a low interest rate rate policy and jitters over rising bank funding costs have driven traders to safe-haven bonds.
Investors are awaiting Federal Reserve Chairman Ben Bernanke's talk on August 26 in Jackson Hole, Wyoming, for hints on how policymakers plan to address the weakness throughout the economy.