Stocks sell-off leaves Dow with worst month in a year

Wall Street closed a turbulent week in the red Friday, shrugging off data showing that the economy had grown significantly during late 2009, amid a sell-off in technology shares and concerns about the pace of the recovery.

Investors pocketed profits, leaving the Dow Jones industrial average down nearly 4 percent in January, snapping a streak of six consecutive months of gains. It was the largest monthly point loss on the blue-chip index since February 2009.

Since reaching a high Jan. 19, stocks have been heading down. The question, analysts said, is what happens after a rally that lifted stocks more than 60 percent from their March lows. Will the markets settle down, or are they in the midst of a correction that could result in more losses?

"There are just some dark clouds hanging over the markets," said James Cox, managing partner at Harris Financial Group in Richmond. "People have been expecting some kind of pullback and people are taking profits and resetting themselves."

On Friday, the Dow fell 0.5 percent, or 53.13 points, to close at 10,067.33, while the broader Standard & Poor's 500-stock index was down 1 percent, or 10.66 points, to close at 1073.87. They were down 3.5 percent and 3.7 percent, respectively, for the month.

The technology heavy Nasdaq composite index had the toughest week among the major indexes. On Friday, it fell 1.5 percent, or 31.65 points, to close at 2147.35 and finish down 2.6 percent for the week.

Apple's stock has been under pressure since it announced its latest offering, the iPad, on Wednesday. Its stock was down 3.6 percent Friday and 7 percent for the week. Microsoft was the worst performer on the Dow on Friday, falling 3.4 percent, despite reporting a 60 percent increase in profit earlier in the week.

The sell-off in technology shares overshadowed government data Friday showing that the economy expanded at an annual rate of 5.7 percent in the final months of 2009, the fastest rate of growth in six years. That bump in the gross domestic product was better than many analysts had forecasted but did not satisfy concerns about the pace of the recovery or that high unemployment will keep the economy weak.

"They realize that the credit crisis may resurface with continued lending restrictions. A 'W' shaped recovery may be a more realistic forecast since new job growth remains at very low levels," said Thomas Francis Nordby, market strategist for Lind-Waldock, a Chicago-based trading firm.

And investors have plenty overseas to also be concerned about. In China, government officials have moved to clamp down on lending to contain inflation and stave off an asset bubble. And concerns have been bubbling that the European Union might have to step in to prop up Greece, which has been struggling with steep debt levels.

That worried investors, but also helped the dollar rally as the euro weakened, analysts said. "The Greek drama unleashed a wave of worldwide investor fears which in turn reignited flight-to-quality investment activity," Tom Sowanick of Omnivest Research, said in a research note.