US stocks fell in a thinly traded and shortened session overnight, as fears over the potential impact of debt problems at Dubai World sent investors fleeing a broad range of stocks including Caterpillar, Bank of America and Alcoa. The Dow Jones Industrial Average closed down 154.48 points, or 1.48%, at 10309.92, retreating from the 13-month closing high it reached Wednesday and marking its biggest one-day drop since Oct. 30. For the week, the Dow ended down 0.08%, snapping a three-week winning streak and marking its worst week since that ending Oct. 30. But the measure is still up 6.15% for the month.
Bank of America was the Dow's weakest component Friday, closing down 48 cents, or 3%, at 15.47, reflecting declines across the financial sector amid uncertainty over how much exposure U.S. banks could have to Dubai World. Caterpillar fell 1.59, or 2.7%, to 57.45.
Alcoa tumbled 34 cents, or 2.6%, to 12.66, hurt by sharp declines across metals futures due to the worries over Dubai World. Crude-oil futures also fell, hurting energy companies including Exxon Mobil, which slid 1.60, or 2.1%, to 74.87.
Still, a number of money managers considered Friday's decline an overreaction, noting that the U.S. doesn't appear to have a great deal of exposure to Dubai World. In addition, they noted that although the Dubai World news in itself was unexpected, the troubles in Dubai don't come as a surprise.
"The fact that the Dubai real estate market right now is struggling is really no secret worldwide," said Jay Leupp, senior portfolio manager of the Grubb & Ellis AGA Realty funds. "You have a lot of empty office space over there and that's a well-known fact."
Leupp said he sees Friday's declines as presenting good buying opportunities. "This is a good day to be looking for bargains," he said. "You would never want to ignore [the Dubai World news], but we don't view it as a material event to our funds or the U.S. equity market," he said.
Nevertheless, the Nasdaq Composite closed down 37.61, or 1.73%, at 2138.44, while the Standard & Poor's 500 dropped 19.14, or 1.72%, to 1091.49.
The financial sector led Friday's broad decline in stocks. Among the hardest-hit in the financial sector were American depositary shares of European banks. Lloyds dropped 49 cents, or 7.9%, to 5.71, while Royal Bank of Scotland fell 55 cents, or 4.6%, to 11.48, and HSBC Holdings slid 3.61, or 5.8%, to 58.46.
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