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Dow dives again Friday; 552 points lost this week

Traders work on the floor of the New

Traders work on the floor of the New York Stock Exchange before the closing bell. (Jan. 21, 2010) Credit: Getty Images

Stocks suffered their fourth sharp drop in five trading days on Friday as investors caved to growing anxiety about weak earnings reports and President Barack Obama's plans to restrict big banks.

The Dow Jones industrial average dropped 217 points Friday, having lost 552 points, or 5.2 percent, over the past three days.

In the past five trading days, the Dow has fallen 537 points, having gained 115 points on Tuesday.

The drop gave the Dow its worst week since the index hit a 12-year low in March.

All the major indicators fell more than 2 percent.

Investors are finding uncertainty and bad news wherever they look. Even before Obama announced his plan on Thursday, they were selling stocks on disappointing earnings and concerns that a possible slowdown in China's economy might spread.

The mood in the market was dark enough that upbeat earnings Friday from General Electric Co. and McDonald's Corp. weren't enough to sway investors.

The problem with earnings reports is that they're not meeting investors' high expectations. Tech stocks were among the big losers after Google Inc.'s fourth-quarter revenue didn't meet forecasts, and after a Citigroup analyst lowered his rating on seven chip makers.

"We expect [earnings] to be better," said Brett D'Arcy, chief investment officer at CBIZ Wealth Management Group in San Diego. "People are being more particular."

In some respects, stocks' big plunge isn't a surprise. Many analysts have been predicting a correction, which technically is a drop of 10 percent from a recent market high, since before the start of the year. They have warned that investors were expecting too much from companies this early in an economic recovery.

Meanwhile, John Brady, a senior vice president of global interest rates at MF Global, said concerns surrounding Obama's plan and China's efforts to tame its economy have investors cutting their exposure to risk.

Investors are also waiting to see whether the Senate will confirm the reappointment of Fed chairman Ben Bernanke whose job security became shakier Friday as testy senators withdrew support.

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