US Stocks Fall on Profit-Taking, Europe off Highs

U.S. stocks fell sharply Friday as investors booked profits from the previous day's hefty rally, pulling European stocks off their highs for the day. Asian stocks rose.

A passer-by watches the electronic stock board of a securities firm in Tokyo, Japan, Friday, Nov. 14, 2008.

(Shizuo Kambayashi/AP Photo)

The Dow Jones index of leading U.S. shares was down 252.72 points, or 2.9 percent, at 8,582.53, giving back a large chunk of Thursday's late 550 point advance.

The Dow's retreat Friday, which was largely anticipated by futures markets following Thursday's third biggest daily points gain, pulled Europe's indexes off their earlier highs. The FTSE 100 index of leading British shares closed only 63.76 points, or 1.5 percent, higher at 4,232.97. Earlier it had been some 170 points higher.

Germany's DAX ended up 60.72, or 1.3 percent, at 4,710.24. It too had been up some 190 points before Wall Street's open.

And the CAC-40 in France was up only 22.01 points, or 0.7 percent, at 3,291.47, way below the 90 point advance it had posted earlier.

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The price action in markets around the world highlights how tenuous confidence remains. Investors have very little faith that price gains one day continue into the next.

"We have seen these quite volatile swings, which are illustrative of the emotional state of investors," said Neil Mackinnon, chief economist at ECU Group.

Confidence is unlikely to return until economic and corporate news starts to improve and if recent economic data are anything to go by, that could be quite a long time yet.

In the U.S., the Commerce Department reported that retail sales fell by a record 2.8 percent last month, surpassing the old mark of a 2.65 percent drop in November 2001 in the wake of the terrorist attacks that year. The decline in sales was led by a huge drop in auto purchases, but sales of all types of products from furniture to clothing fell as consumers reined in spending.

A further indication of the spending retrenchment taking place came when the University of Michigan said its consumer confidence index remained near lows, despite a modest rise to 57.9 in November from October's 57.6. As recently as September the index was 70.3.