NEW YORK -- U.S. stocks on Friday saw their biggest one-day decline since June, capping the worst week for benchmark indexes since 2012, as a selloff in developing-nation currencies spurred concern global markets will become more volatile.
Caterpillar, General Electric and Boeing slid at least 2.6 percent to pace losses in the Dow Jones industrial average. Kansas City Southern plunged 15 percent, the biggest retreat since 2008, after reporting lower-than-estimated earnings. International Game Technology tumbled 15 percent as the maker of slot machines posted first-quarter profit that missed analysts' projections.
The Standard & Poor's 500 index retreated 2.1 percent to 1,790.29 to close at the lowest level since Dec. 17. The benchmark index declined 2.6 percent this week. The Dow slid 318.24 points, or 2 percent, to 15,879.11 on Friday. The 30-stock gauge lost 3.5 percent this week. About 8.8 billion shares changed hands on U.S. exchanges, the busiest trading day of the year.
"The volatility of the emerging markets and the currency impacts are affecting U.S. markets," Eric Teal, who helps oversee $3.5 billion as the chief investment officer at First Citizens BancShares in Raleigh, N.C., said by phone. "Following the strong gains of last year, I think it's to be expected that you might have an overreaction here of selling."
Emerging-market currencies had their worst selloff in five years Thursday as Argentine policy makers devalued the peso by reducing support in the foreign-exchange market. The Turkish lira plunged, Ukraine's hryvnia sank to a four-year low and South Africa's rand weakened beyond 11 per dollar for the first time since 2008. China's banking regulator ordered its regional offices to increase scrutiny of credit risks in the coal-mining industry, said two people with knowledge of the matter, signaling government concern about possible defaults.
Investors are losing confidence in some of the biggest developing nations,
extending the rout in currencies that began last year when the Federal Reserve signaled it would slow the pace of its monthly purchases of Treasuries and mortgage bonds. The S&P 500 fell 0.9 percent Thursday and the Dow dropped to a one-month low after a gauge of manufacturing activity in China unexpectedly contracted.
The MSCI Emerging Markets Index lost 1.5 percent Friday, extending its decline for the year to more than 5 percent, while Europe's equity benchmark slid the most since June.
Three rounds of Fed monetary stimulus have helped the S&P 500 rise about 165 percent from a 12-year low in 2009. The U.S. equity benchmark rallied 30 percent to a record last year, the most since 1997. Equities have since pared those gains, with the index down more than 3 percent for 2014.
"You've had a massive selloff in these emerging-market currencies," Nick Xanders, a London-based equity strategist at BTIG, said by telephone. "Ruble, rupee, real, rand: they've all fallen and the main cause has been tapering. A lot of companies that have benefited from emerging-markets growth are now seeing it go the other way."
The S&P 500 trades at about 15.2 times the estimated earnings of its members, more than the five-year average multiple of 14.1, data compiled by Bloomberg show.
Ten companies in the S&P 500, including Procter & Gamble and Bristol-Myers Squibb, reported results Friday. Of the 122 index members that have released earnings so far this season, 74 percent have beaten estimates for profit and 67 percent have exceeded sales projections, according to data compiled by Bloomberg.