Stocks Slump on China Rate Hike Fears
The blue-chip Dow closed down 91 points, or 0.8%, at 11,193. The broader S&P 500 ($SPX) lost 14 points, or 1.2%, to settle at 1,199. The tech-heavy Nasdaq Composite ($COMPX) shed 37 points, or 1.5%, to 2,518.
The selling started overnight when Asian markets tumbled on concern the Chinese central bank would tighten monetary policy to combat rampant inflation. The Chinese benchmark Shanghai Composite index plunged more than 5%, its worst drubbing in 14 months.
In economic news, the best reading on consumer sentiment in five months did little for traders' spirits. The Thomson Reuters/University of Michigan reading on consumer sentiment came in at 69.3 in November, up from 67.7 in October and slightly higher than economists' expectations.
Stocks hit their worst slump in three months this week, but Friday's selling was more of a knee-jerk reaction to what happened in Asian markets overnight than a change of direction for traders, says Joe Greco, managing director at Meridian Equity Partners.
"The markets rallied into the mid-term elections and quantitative easing last week," Greco says. "This week's action and Friday's action is still part of the process of selling the news."
For more on Greco's take from the floor of the New York Stock Exchange (NYX), see the video above.