Hedge funds shoring up cash on redemption fears appear to drive sell-off.
Wall Street morphed an afternoon rally into a crashing close on Friday.
Observers
attributed at least some of the unrest to forced selling by hedge-fund
managers as jittery investors pull their money out of the vehicles.
Hogan, chief market analyst at Jefferies, said the afternoon increase was spurred by comments from U.S. Treasury Secretary Hank Paulson on the use of the Troubled Asset Relief Program. (See "The U.S. Turns On A Dime.")
"It felt better to hear Paulson explain some of the head-scratchers to us, but the overreaching feeling on the market though is there's a great deal of pressure from folks going to see some redemptions," Jefferies said. "November 15 is an important date, and hedge funds are selling stocks to raise cash."
By the end of the day, the Dow Jones industrial average fell 3.8%, or 337.94 points, to 8,497.31, while the Nasdaq composite index tumbled 5.0%, or 79.85 points, to 1,516.85, and the S&P 500 index dropped 4.2%, or 38.00 points, to 873.29. The yield on the benchmark 10-year U.S. Treasury note fell to 3.73% from 3.82% Thursday.
Citigroup
In a memorandum Friday afternoon obtained by Forbes.com, the embattled Pandit invited all employees to a Monday morning "town hall" meeting. He also sought to reassure Citi's hundreds of thousands of employees worldwide that Citi's "capital is plentiful, we have abundant liquidity and our revenue is strong."
The broader financial sector didn't do as well as Citi. By the end of the day the Financial Select Sector SPDR
The retail sector hasn't looked so bad in years. In addition to the
U.S. Commerce Department reporting the largest monthly drop in retail sales on record, Abercrombie & Fitch
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