US stocks closed out their worst January ever with another slide on Friday after data showed the economy contracted at the fastest pace in nearly 27 years in the fourth quarter. Uncertainty about the fate of a plan by the Obama administration to relieve banks of money-losing assets added to the bearish tone, with Citigroup plunging 9 percent and Bank of America dropping 3 percent.
Procter & Gamble Co, the maker of Pampers diapers, Gillette razors and Tide laundry detergent, was the Dow's top drag, sliding 6.4 percent, after its quarterly profit missed expectations. P&G also added its name to a growing list of companies cutting outlooks.
"We're in for another tough year," said Dean Barber, president of investment firm Barber Financial Group in Kansas City. "You have consumer sentiment at an all-time low, job losses that have exceeded the total number of job losses in the '81-'82 recession, we're 13 months into the latest recession, so people feel bad."
The Dow Jones industrial average fell 148.15 points, or 1.82 percent, to 8,000.86. The Standard & Poor's 500 Index slid 19.26 points, or 2.28 percent, to 825.88. The Nasdaq Composite Index tumbled 31.42 points, or 2.08 percent, to 1,476.42. Both the Dow and the benchmark S&P 500 suffered their worst January ever, le the S&P 500 dropped 0.73 percent, and the Nasdaq edged down 0.06 percent.
Goldman Sachs' chief US equity strategist David Kostin said in a research note the brokerage expected the S&P 500 to retest its bear market low of November during the first quarter, before rising to their 1,100 year-end target. The S&P 500 is up about 10 percent from the November 21 intraday low after starting 2009 up more than 20 percent.
In Friday's session, Procter & Gamble Co tumbled $3.72 to $54.50 on the New York Stock Exchange. Kraft Foods Inc slid 4.2 percent to $28.05, making the food maker the third worst drag on the Dow, behind 3M Co, a diversified manufacturer.
3M shares fell almost 5 percent to $53.79 after Barclays and J.P. Morgan analysts cut their price targets, a day after the company posted a drop in fourth-quarter profit and sales. Among financial stocks, shares of Citigroup slid 9 percent to $3.55, while shares of Bank of America dropped 3 percent to $6.58. The S&P financial index fell 2.5 percent, capping its 6th straight monthly slide.
US policy-makers have yet to reach a consensus on how a US government-run bad bank would work and the idea may not move forward, CNBC television reported, citing unnamed sources. The Nasdaq's decline was led by a 3.1 percent slide in Apple shares to $90.13, and was only partly offset by a jump of 17.6 percent in Amazon.com to $58.82, following the online retailer's rosy outlook and holiday sales.
Another standout loser was Juniper Networks, down more than 16 percent at $14.16, after the network equipment provider warned its first-quarter revenue and profit would fall far short of Wall Street's expectations. Companies in the basic materials sector also sold off, sparking a 3.7 percent slide in the S&P materials index. Aluminum producer Alcoa Inc shed 7.7 percent to $7.79.
Volume was active on the New York Stock Exchange, where about 1.51 billion shares changed hands, above last year's estimated daily average volume of 1.49 billion shares, while on the Nasdaq, about 2.14 billion shares traded, below last year's daily average of 2.28 billion. Decliners outnumbered gainers on the NYSE by a ratio of about 3 to 1, while on the Nasdaq, about nine stocks fell for every four that rose.
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