U.S. stocks tumbled on Thursday to fresh lows for the year, while Friday's market outlook became more complex after the closing bell.
Wall Street got an unpleasant surprise from IBM, which reported earnings a few days early that fell far short of analysts' expectations.
But a federal judge's ruling in favor of Eli Lilly and Co. (LLY.N: Quote, Profile, Research) , upholding Lilly's patent on its schizophrenia drug Zyprexa, lifted drug stocks after hours and could buoy that sector when New York trading resumes tomorrow.
The late-breaking news from International Business Machines Corp. (IBM.N: Quote, Profile, Research) triggered a rally in U.S. Treasury bonds as investors fled stocks for the relative safety of government debt. Earlier in the day, bond prices had been mixed.
In other New York markets, the dollar hit two-month highs against the euro and the Swiss franc, while COMEX June delivery gold (GCM5: Quote, Profile, Research) fell $5.40 to end at $425.60 an ounce, its weakest close since Feb. 11.
NYMEX May crude oil futures rose 91 cents to settle at $51.13 a barrel, after falling below $50 for the first time in seven weeks.
After IBM's earnings release, a money manager said its disappointing results may be a sign of things to come.
"Maybe this is a large canary in the coal mine saying, 'maybe we're really having a slowdown,'" said Cummins Catherwood, a managing director at Walnut Asset Management in Philadelphia, which has about $750 million in assets under management.
The Dow Jones industrial average was down 125.18 points, or 1.20 percent, to close at 10,278.75. The Standard & Poor's 500 Index was down 11.74 points, or 1.00 percent, to finish at 1,162.05. The tech-laced Nasdaq Composite Index ended down 27.66 points, or 1.40 percent, at 1,946.71.
Both the Dow and the S&P 500 closed at their lowest levels since Nov. 4, just two days after the U.S. presidential election. The Nasdaq's close was its lowest since Oct. 27.