Investors Get Spooked

Stocks tanked on Friday, erasing all of the previous day's big gains, as a drop in consumer spending shook up things on Wall Street. The Dow Jones industrial average lost 250 points. The S&P 500 fell 29 points and the Nasdaq composite shed 52 points. The selloff was broad based, with all 30 Dow components declining and most stock sectors sliding. Shares of Chevron (CVX), 3M (MMM), IBM (IBM), and American Express (AXP) led the Dow lower. The biggest declines were among banks, energy and materials companies. Investors started shedding stocks after the Labor Department said personal spending fell 0.5 percent in September. Another report that showed a drop in consumer sentiment in September only added more fuel to the fire. U.S. light crude oil for December delivery fell $1.52 to $78.35 a barrel on the New York Mercantile Exchange. Bond prices rallied as stocks fell. The yield on the benchmark 10-year Treasury note fell to 3.42 percent from 3.50 percent. The dollar gained versus the euro and the yen.

Word on the Street

The Commerce Department spooked investors a day before Halloween after it reported that US consumer spending fell sharply in September following the expiration of the government's cash-for-clunkers program. The fall in spending came as Americans' income turned flat in September following a 0.1 percent increase the previous month.

Video -- Consumers Ready to Spend?

Consumers must be spending money on beauty products because Estee Lauder Cos. (EL) blew past expectations after its fiscal first-quarter profit more than doubled. The company also raised its 2010 forecast as department stores continue to demand their products.

The Occupational Safety and Health Administration announced the largest fine in its history today. The government agency slapped British oil giant BP (BP) with an $87 million penalty for workplace violations in connection with a 2005 explosion that killed 15 workers at its Texas City, TX refinery.

Declining oil prices dealt another blow to an energy giant's earnings. Chevron Corp.'s (CVX) third quarter profit fell 51.5% as oil and natural gas prices continued to slump during the quarter. Despite the decline in earnings, the number still beat analysts' expectations thanks to a jump in output and a sharp cut in operating costs .

Video -- Chevron Earnings Reaction

Now that the heat has been turned up on the Bernie Madoff case, his co-conspirators are dropping like flies. David Friehling, the long-time accountant of Mr. Madoff, is expected to plead guilty next week in a cooperation deal.

Sony (SNE) posted its fourth consecutive quarter of losses , but an aggressive cost-cutting strategy is shinning some sunshine into the company's future.

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CIT Group (CIT) says billionaire investor and bondholder Carl Icahn has agreed to support its restructuring plan. What a difference a couple of days can make! Earlier this week, Carl Ichan was trying to stage a revolt after the troubled lender basically snubbed his billion dollar offer .

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