The U.S. stock market fell sharply to end the week on Friday as hopes for a compromise on fiscal cliff negotiations waned late in the day.
The final hour of trade saw particularly heavy selling, sending the major averages out on session lows. The Dow Jones Industrial Average fell below the 13,000 level and notched loss of 158 points, or 1.21 percent on the day. The S&P 500 and Nasdaq were also hit hard, losing 1.10 percent and 0.86 percent, respectively.
The risk aversion was less pronounced in the energy and precious metals market as crude oil, gold and silver all posted only minor losses. As investors fled riskier assets, Treasurys did well with the yield on the 10-Year Note falling 4 basis points to 1.70 percent as buyers were active in the market. The yield on the 30-Year Bond declined 5 basis points to 2.87 percent. Shorter maturities also saw yields fall along with the decline in the stock market.
In the currency market, the closely watched EUR/USD pair fell 0.08 percent to $1.3222. The biggest mover against the U.S. dollar was the British pound, with the GBP/USD pair adding 0.31 percent to $1.6152.
Investor fear was underscored by a huge move in the VIX which rose nearly 16 percent to 22.52. The VIX has now broken out to multi-month highs as investors and traders look to hedge their market exposure ahead of the looming fiscal cliff.
Most all of the activity in U.S. equities was on the sell-side, as not a single issue with a market capitalization of over $2 billion rose more than five percent on the session. Active stocks included Herbalife (HLF), which rose almost four percent, and Barnes & Noble (BKS) which added over four percent on heavy volume.
One of the biggest winners on the Nasdaq on Friday was small-cap name magicJack VocalTec (CALL). Shares surged more than 10 percent after the company appointed a new CEO and said that it sees fourth-quarter earnings results "well above" previous estimates.
A number of energy stocks fell on heavy volume on Friday, including CVR Energy (CVI), Integrys Energy (TEG)and Carrizo Oil & Gas (CRZO). Despite the heavy volume, the losses in CVR and Integrys were only around one percent. Carrizo, on the other hand, fell more than five percent on the day.
The biggest losers in the Dow Jones Industrial Average were Hewlett-Packard (HPQ) and Chevron (CVX), which fell 2.56 percent and 1.91 percent, respectively. Not a single Dow stock finished Friday's session in positive territory.
Volume on the major market ETFs was mixed with the SPDR S&P 500 ETF (SPY) recording slightly heavier than usual volume and the PowerShares QQQ Trust ETF (QQQ), which tracks the Nasdaq 100, trading fewer shares than normal. Volume on the iShares Russell 2000 Index ETF (IWM) was around 29 million shares compared to a 3-month daily average of 38 million.
In after-hours trading, all of these ETFs have continued to fall as S&P 500 futures continued to sell-off sharply after the close of the equity session. At last check, the futures were trading down 26 handles, or 1.86 percent, with a good portion of the losses coming after the close of the S&P 500 cash market. The S&P cash, in comparison, ended the day down a little less than 16 points, or 1.10 percent, at 1,402.
In order to reflect the continued selling the futures after the cash close, the SPDR S&P 500 ETF (SPY) has traded down another 0.76 percent to $138.81 in the after hours. On the week, the S&P 500 lost almost three percent, and if Friday's close is any indication, there could be plenty more volatility next week.
By Scott Rubin