By Donna Kardos Yesalavich
NEW YORK (MarketWatch) -- U.S. stocks fell Friday despite
positive signs on Black Friday sales in the U.S. as worries over
the euro zone's sovereign debt crisis weighed.
The Dow Jones Industrial Average (DJI) tumbled 108 points, or
1%, to 11078, in early trading. All 30 of the measure's components
were in the red, with materials components DuPont (DD) and Alcoa
(AA) hit the hardest. DuPont dropped 1.9% while Alcoa slipped
1.5%.
Boeing (BA) fell 0.8%. The company is making changes to the new
787 Dreamliner's electrical system and the software that runs it
after an in-flight fire and subsequent power failure aboard one of
the planes more than two weeks ago. The company did not say how
long it would take to finish designing the changes and then
implement them.
The Nasdaq Composite (RIXF) dropped 0.7% to 2526. The Standard
& Poor's 500 index (SPX) declined 0.9% to 1188, with all its
sectors lower, led by materials and energy.
Friday's drop -- which puts the Dow off about 1.2% for the week,
following its negative trend for the week of Thanksgiving seen in
recent years -- came as the euro zone's sovereign debt crisis
continued to escalate, with the market homing in on Spain as
another potential weak spot.
Spanish Prime Minister Jose Luis Rodriguez Zapatero moved to
dispel the growing anxiety surrounding the country's fiscal
position Friday, saying there was "absolutely" no chance the euro
zone's fourth-largest economy would seek a bailout from the
European Union. But his attempt to calm the markets had little
effect, with the euro tumbling and the selloff in Spanish and
Portuguese sovereign bonds continuing. The euro traded at $1.3244
recently.
Meanwhile, European leaders sparred over whether to commit more
funds to rescue struggling euro-zone countries, as financial-market
pressure on the region's weakest economies intensified. The
European Union's executive arm, the Brussels-based EU Commission,
floated a proposal on Wednesday to double the size of Europe's 440
billion ($588 billion) bailout fund for euro-zone governments, but
the idea was dismissed by Germany, according to people familiar
with the situation.
Ireland's negotiations with the EU and the International
Monetary Fund over the details of the country's 85 billion ($113.52
billion) financial-assistance package appeared to be drawing to a
conclusion. But a report in the Irish Times Friday that senior
bondholders in Irish banks could be compelled to pay some of the
costs of the bailout led Allied Irish Banks PLC (AIB) and Bank of
Ireland PLC's senior bonds to fall around 0.05 percentage points to
trade at around 80% of face value.
Investors sought safety in the dollar and U.S. Treasurys. The
U.S. Dollar Index (DXY), tracking the U.S. currency against six
others, climbed 0.6%. Gains in Treasurys pushed the yield on the
10-year note (UST10Y) down to 2.87%.
The euro-zone worries overshadowed strong early signs on Black
Friday sales in the U.S. Special sales and a sense of tradition
pushed shoppers out the door early the day after Thanksgiving,
traditionally seen as the start of the holiday shopping season.
Lines wrapped around stores and parking lots across the nation as
shoppers sought early morning deals, especially on consumer
electronics and toys. About 138 million Americans are expected to
go shopping this weekend.
Some $447 billion will be spent during the holiday season, up
2.3% from last year, the National Retail Federation predicts, with
Black Friday weekend seeing about $41.2 billion in business. An NRF
survey also found that up to 138 million people plan to shop this
weekend, higher than the 134 million people who planned to do so
last year.
However, retail shares were mixed. Tiffany (TIF) fell 0.9% while
Homem Depot (HD) dropped 0.7% and TJX Cos (TJX) shed 0.5%, while
Macy's (M) climbed 1%, Best Buy (BBY) rose 0.8% and Big Lots (BIG)
added 0.7%.
Among other stocks in focus, Del Monte Foods (DLM) rose 4.1%
after the maker of pet foods and canned vegetables announced it
agreed to a takeover by an investor group led by Kohlberg Kravis
Roberts & Co. LP in what would be one of the year's largest
private-equity buyouts.