NEW YORK — U.S. stocks fell Friday, with the major indexes slammed by their worst weekly drop in five weeks, as rising inflation fed investors’ fears about the economy, while reducing the odds of another Federal Reserve rate cut next month.
“The big question that still hangs over the stock market is (whether) the problems in housing and the credit markets (are) going to lead to an economic and earnings recession or not. Today is a day where it seems like yes,” said Hugh Johnson, chairman of Johnson Illington Advisors.
The Dow Jones industrial average shed 178.1 points, or 1.3 percent, to finish at 13,339.8, with all but one of its 30 components hit with losses.
The Dow’s decline gave it a weekly loss of 2.1 percent, its worst showing since the week ending Nov. 9, when the index fell 4.1 percent.
Unlike trade in recent sessions, financials did not lead the Dow’s decline, with the index’s hardest-hit including Alcoa Inc., down 3.1 percent, and Home Depot Inc., off 3.7 percent.
“The decline in the cyclicals, rather than the financials, seems to reflect the concerns raised by the strong inflation numbers. Namely that the Federal Reserve now has fewer options to deal with a possible economic downturn in 2008,” said Frederic Ruffy, an analyst at Optionetics.
Another blue chip, Citigroup Inc., recovered from early losses only to fall into the red as the session neared an end, finishing 1 percent down in the wake of its downgrade by Moody’s Investors Service in response to Citi’s plan to move about $49 billion in assets from structured investment vehicles onto its balance sheet.
The Dow’s sole advancer proved to be Microsoft Corp., which ended ahead 0.2 percent.
Off the Dow, active shares included those of Black & Decker Corp., down 6.8 percent after the power toolmaker warned that business conditions and an anticipated recall would dent current-quarter results.
Broader indexes fell as well, with the S&P 500 Index dropping 20.46 points, or 1.4 percent, to 1,467.95, a decline that gave it a weekly drop of 2.4 percent, versus the 3.7 percent weekly slide it encountered in the second week of November.
The technology-heavy Nasdaq Composite Index fell 32.75 points, or 1.4 percent, to 2,635.74, which had it tallying a weekly loss of 2.6 percent. It fell an astounding 6.5 percent in the week ending Nov. 9.
On the New York Mercantile Exchange, crude-oil futures fell for a second day on concerns that an economic slowdown would lower demand, with crude for January delivery slipping 98 cents to close at $91.27 a barrel.
Elsewhere on the Nymex, gold fell $6 to finish the session at $798 an ounce.
Volume on the New York Stock Exchange came to 1.3 billion, and topped 1.9 billion on the Nasdaq. Decliners topped advancers on both exchanges, by nearly 4 to 1 on the NYSE and 3 to 1 on the Nasdaq.
