MarketView for January 24

Summary

The S&P 500 fell 2.6 percent for the week, closing below its 50-day moving average Friday for the first time since October 9, suggesting more selling may be ahead for the market that closed out 2013 with a 30-percent gain. The day's decline was also the largest percentage fall since June 2013 for the S&P 500, while the CBOE Volatility index rose 32 percent and registered its largest weekly percentage gain since May 2010.

Emerging market assets were hit by worries about slowing growth in China as well as political problems in Turkey, Argentina and Ukraine.

Many on the Street are looking for the Federal Reserve to reduce its stimulus by another $10 billion a month; the worry of course is that interest rates will soon rise by more than had been previously expected. Fed policymakers will conclude a two-day meeting on Wednesday.

Among the 10 major S&P 500 sectors, industrials fared the worst, down 3.1 percent, as General Electric fell 3.4 percent to $24.95 and Boeing was down 3.3 percent to close at $136.65.

For the week, the Dow fell 3.5 percent and the Nasdaq fell 1.7 percent. The Dow's weekly drop was the steepest since November 2011.

However, investors were willing to pay more for protection against a drop in the S&P 500 today than three months down the road.

The last time the spread between the CBOE volatility index .VIX and three-month VIX futures turned negative was mid-October, shortly after a 4.8 percent pullback in the S&P 500 opened the door to the last leg of the 2013 market rally.

Worries over China's growth surfaced after a disappointing manufacturing number spurred the S&P 500's 0.9 percent drop on Thursday.

The Turkish lira hit a record low and the South African rand fell to five-year low against the dollar.

Argentina's government said Friday it would relax stringent foreign-exchange controls, after it abandoned its long-standing policy of intervening to support the peso currency. That resulted in the currency's steepest plunge since the 2002 financial crisis.

Procter & Gamble managed to swim against the stream, advancing 1.2 percent to $79.18, giving the Dow its greatest shot in the arm on Friday. The world's largest household products maker reported lower quarterly profit, but kept its 2014 sales forecast unchanged.

Volume was well above the average for the month. About 8.8 billion shares changed hands on U.S. exchanges, compared with the average of 6.6 billion so far this month, according to data from BATS Global Markets.