Stocks closed deep underwater on Friday, with Wall Street recording its first monthly loss since August, as investors compiled a list of worries that now include emerging markets.
The Dow Jones Industrial Average rallied from a 230-point drop in the morning, but still closed down 149 points, or almost 1 percent.
The S&P 500 fell 11 points and the Nasdaq lost 19,
Given the market's slide, investors are starting to realize there is "selective value out there," Jim Russell, senior equity strategist for U.S. Bank Wealth Management. "I still think the emerging market currency influence and volatility that goes into that probably plays out into the next couple of trading days," he said of the declines seen in the currencies of such countries as Taiwan, Russia and Turkey, that have come with signs China's economy is slowing.
Dependence on China as an export market and the tendency for the U.S. dollar to rise as the Federal Reserve trims its asset purchases are both negative for emerging markets, while "the U.S. looks that much more stable and fundamentally superior to other global economies," said Russell.
"We do think the decline in the U.S. markets will be confined. We don't sense a wipe-out or dramatic decline is at hand here. Investors perhaps have gotten spoiled into thinking the market only goes in one direction," Russell added.
"When we haven't had any significant corrections, it doesn't take much," Randy Frederick, managing director of active trading and derivatives at Charles Schwab, said of the market's early dive. "If you look at years when January closes down, the odds of an up year are only 46 percent, based on patterns going back to 1951. That's basically a coin flip," said Frederick.
Amazon.com declined after the online retailer reported profit and sales beneath estimates and Mattel dropped after a decline in Barbie sales dented its results.
Stocks remained under water through a series of economic data on Friday, with Thomson Reuters/University of Michigan's final read on consumer sentiment showing a decline in January from the previous month, while the Chicago Purchasing Manager's Index for January fell 1.2 to 59.6, down for a third month in a row. Data also showed personal income up 0.1 percent in December, matching estimates, and spending rising 0.4 percent versus a 0.5 percent estimate.
As the dollar climbed against the currencies of major U.S. trading partners; the yield on the 10-year Treasury note fell 4 basis points to 2.657 percent.
Gold futures for April delivery fell $2.60 to $1,239.80 an ounce, down 1.9 percent on the week after five weeks of gains. Crude-oil futures for March delivery fell 74 cents, or 0.8 percent, to $97.49 a barrel, up 0.9 percent for the week and down about 0.9 percent in January.
U.S. stocks jumped on Thursday, with the S&P 500 on track for weekly gains, as companies including Facebook reported better-than-expected quarterly results and data had the economy expanding in the fourth quarter as consumer spending gained traction.