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Dow industrials have their worst day since November 2008

Traders Ryan Falvey, Jonathan Corpina, and Richard Newman, left to right, work on the floor of the New York Stock Exchange, Friday. U.S. stocks closed sharply lower.
Traders Ryan Falvey, Jonathan Corpina, and Richard Newman, left to right, work on the floor of the New York Stock Exchange, Friday. U.S. stocks closed sharply lower. AP

For months, the stock market has been unusually flat, hovering near record highs but unwilling to budge as investors waited out economic uncertainty in the nation and abroad.

This week, investors appear to have finally decided on their course, wiping out the year’s gains amid a broad sell-off that pushed the markets into negative territory – and to their lowest point since February. The Standard & Poor’s 500-stock index and Dow Jones industrial average both closed down more than 3 percent Friday and have lost more than 5 percent for the week. The Dow lost 530 points to close at 16,459 – its worst one-day point loss since 2008.

The decline pushed the Dow into correction territory – a 10 percent drop from its peak earlier this year.

“There’s an old phrase that says that the market takes the stairs up and the elevator down,” said Jim Dunigan, chief investment officer at PNC Wealth Management. “I think that’s what you’re seeing.”

Analysts said the market’s dip this week doesn’t necessarily signal that stocks are entering a period of long-term decline. Indicators of the U.S. economy have been mostly positive in recent months. But investors have feared the market has gotten ahead of economic growth.

So this may be the long-awaited correction some analysts have foreseen.

For nervous investors, the hit to their 401(k) retirement accounts can be troubling.

“People are looking for an excuse to worry,” said Geoffrey Sipes, a portfolio manager at U.S. Trust. “That’s healthy. It means people are paying attention.”

The Los Angeles Times contributed.

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