US Stocks

U.S. stocks fell Friday and posted the biggest weekly decline in a year, as a blur of debt-ceiling developments left the market uncertain over the course of Washington's deadlocked negotiations. The Dow Jones Industrial Average closed down 96.87 points, or 0.79%, at 12143.24, in a volatile session that extended the index's losing streak to six straight sessions. All but two of the 30 Dow components finished in the red. The blue-chip index tumbled 537.92 points for the week, its biggest point drop since the week ended May 7, 2010. It finished July down 2.2%, its third consecutive monthly decline. The Dow, which had tumbled as much as 157 points Friday, recovered much of its early losses and even briefly turned positive after President Barack Obama stepped up pressure on Congress to compromise on raising the nation's debt ceiling. But the market languished through much of the afternoon before closing lower. Technical factors also played a role in Friday's action. Traders said the S&P 500 bounced off its 200-day moving average, considered a key technical support level, which helped prevent the market from sustaining additional losses. The Standard & Poor's 500-stock index fell 8.39 points, or 0.65%, to 1292.28, led lower by energy and material stocks. All 10 of the S&P 500's sectors traded in negative territory. The index fell each day during the week, suffering a 3.9% weekly decline. It dropped 2.2% in July. The Nasdaq Composite sank 9.87 points, or 0.36%, to 2756.38. The technology-oriented index fell 0.6% in July.

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In corporate news, Merck reported second-quarter earnings that matched estimates and adjusted its full-year outlook higher. The blue-chip drug company also said it would cut its workforce by an additional 12%-13% by the end of 2015 as part of a restructuring program. Merck, one of the Dow's biggest decliners, fell 80 cents, or 2.3%, to 34.13. Elsewhere, Expedia gained 2.70, or 9.3%, to 31.69. The company's second-quarter earnings rose 23% as a jump in international hotel books and growing advertising revenue lifted its margins.

European Stocks

European stock markets ended lower Friday after data showed disappointing U.S. economic growth and as fears of a possible default by Washington grew amid confusion about efforts to raise the nation's borrowing limit. The Stoxx Europe 600 index declined 0.7% to close at 265.25. The index ended July with a monthly decline of 2.5%. The benchmark extended losses after the U.S. government cut its estimate of first-quarter growth to 0.4%, down from the 1.9% expansion initially estimated. The Commerce Department also reported a preliminary second-quarter growth rate of 1.3%, compared with the 1.6% consensus forecast. European stocks had already been hit by news that the House Republican leadership late Thursday cancelled a vote on Speaker John Boehner's deficit-reduction plan in the face of a rebellion by conservatives. And closer to home, Moody's Investors Service warned it may downgrade Spanish government debt. Banks stood out among the main decliners, with Credit Agricole SA shedding 2.4% in Paris after the lender said late Thursday that losses at its Greek business will knock around EUR850 million off second-quarter results. Among other major banks, Societe Generale fell 2.4% and BNP Paribas lost 2%, helping pull the CAC 40 index down 1.1% to settle at 3,672.77 in Paris. Among the stronger performers in Europe, shares of mobile-network operator Vodafone Group PLC rose 4% in London, gaining after Verizon Wireless, its U.S. joint venture with Verizon Communications Inc., said it will pay a $10 billion dividend to its two owners. The U.K.'s FTSE 100 index dropped 1% to close at 5,815.19. Miner Anglo American PLC fell 3.3% after results fell short of some analyst expectations and as it also warned that costs are rising. In Germany, the DAX 30 index fell 0.4% to end at 7,158.77, weighed down by a 1.5% drop for electric utility RWE AG.

Asian Stocks

Asian stock markets ended lower Friday on a setback to expectations for progress in resolving the U.S. debt crisis, with Japanese stocks also hit by a set of weak earnings reports and profit outlooks. Japan's Nikkei Stock Average ended the day 0.7% lower at 9,833.03, South Korea's Kospi gave up 1.1% to 2,133.21, while Taiwan's Taiex lost 1.4% to 8,644.18. Hong Kong's Hang Seng Index fell 0.6% to 22,440.25 and China's Shanghai Composite edged 0.3% lower to 2,701.73. The day's weak performance added to the weekly losses for most regional benchmarks. The Nikkei Average gave up 3.0%, while the Shanghai Composite shed 2.5% during the week. Continued dollar weakness weighed on many Japanese exporters, with Toyota Motor down 0.9%, and Komatsu 1.8% lower. Nintendo plunged 13% in Tokyo after reporting a quarterly net loss of Y25.5 billion, virtually identical to a year earlier, and slashed its fiscal-year profit outlook and the price of its 3DS handheld games console. Samsung Electronics added 0.8% in a downbeat Seoul market after the world's top memory-chip maker posted an 18% drop in second-quarter net profit, broadly in line with analysts' estimates compiled by Dow Jones Newswires. In Hong Kong, financial-sector stocks were again broadly pressured by worries over the U.S. debt crisis. Heavyweight HSBC Holdings PLC dropped 1%, and Industrial & Commercial Bank of China gave up 0.5%.

Commodities

Base metals closed mostly lower on the London Metal Exchange Friday, following a day of largely directionless trade that saw market players sit on the sidelines ahead of what looked to be a turbulent weekend for the U.S. debt debate. At the close, LME three-month copper traded just $15 higher at $9,829 a metric ton, while lead saw the weakest performance, closing 1.6% lower at $2,612/ton. Nickel stood out from the crowd, closing 1.8% higher at $24,990/ton as technical selling at key resistance levels propelled prices higher. Light, sweet crude-oil futures tumbled 1.8% to $95.70 a barrel Friday amid concerns over slower-than expected U.S. economic growth.

Prices came under further pressure as a deal to resolve the crisis over the U.S. debt ceiling remained in limbo ahead of the fast-approaching Aug. 2 deadline. Light, sweet crude-oil futures for September delivery on the New York Mercantile Exchange settled $1.74 lower at $95.70 a barrel, the weakest price since July 18. The contract briefly dropped to a session low of $94.95 a barrel. ICE Brent crude for September settled down 62 cents at $116.74 a barrel. Gold stood out as a beacon of safety as investors, anxious about an escalating U.S. debt crisis and weaker-than-expected growth, pushed prices to a record high. The most actively traded gold contract, for December delivery, settled at a record $1,631.20 a troy ounce, up $15.00, or 0.9% on the Comex division of the New York Mercantile Exchange. The contract touched an intraday record of $1,637.50.

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