Budget austerity gives financial managers a chance to shine - GovExec.com Budget austerity gives financial managers a chance to shine - GovExec.com

Friday, June 1, 2012

Budget austerity gives financial managers a chance to shine - GovExec.com

Budget austerity gives financial managers a chance to shine - GovExec.com

Defense Department leaders preparing for historic budget cuts should tap the expertise of their financial management executives, who see the current challenges as their moment to “step up to the plate and shine,” stated a new survey conducted by the American Society of Military Comptrollers and Grant Thornton LLP.

The 10th annual survey, released Thursday, summarizes responses from 742 uniformed and civilian defense financial leaders and employees on their role in helping the Pentagon prepare for new military conflicts and a possible budget sequester, and adjusting to a “mind-set of less.”

With top Defense leaders preoccupied with macro issues, “now is truly a time for all [financial management] professionals to assume a leadership role in meeting the challenges of significantly reduced resources in an uncertain and dangerous world,” an analysis of the survey results said.

“We are seeing an increased need for the strategic financial management professional who combines technical finance knowledge with strong analytics and sound operational knowledge,” Al Tucker, executive director of the controllers association, said in a statement. “These professionals can craft budget-cutting solutions that assess and protect priority programs while still generating funds for investments required by the president’s new policy guidance.”

Retired Vice Adm. Lewis Crenshaw, a principal at Grant Thornton and the primary interviewer for the survey, said, “a sluggish U.S. economy, the return of troops from Iraq and Afghanistan, the specter of sequester, a gridlocked election-year Congress, and a rethinking of Defense strategy have combined to create a ‘perfect financial management storm.’ ” If the right people are in place, he added, “the financial management corps is ready to step up and shine.”

The survey showed that about two-thirds of financial managers are optimistic about their ability to bring cultural change to reflect the new austerity. But “inertia, resistance to change and entrenched interests that want to maintain the status quo all can work against these efforts,” the survey report said. The most important skills required of modern financial managers are critical thinking, analytical prowess, understanding the operational context of the programs they support, and creating and using performance measures, respondents said.

The survey showed a gap between top executives and field managers on some key questions. Asked whether pay and hiring freezes are having a significant impact on the workforce, 77 percent of executives said no, but only 39 percent of lower-level managers agreed.

Similarly, the goal of achieving auditable financial statements -- a challenge that has vexed the Pentagon for nearly two decades -- is a higher priority for top-level executives than for field managers.

The financial managers were asked which of several approaches top defense leaders likely would take. Options included shifting financial management tasks to nonspecialists; requiring managers to take a 5 percent to 10 percent across-the-board budget cut; negotiating to reduce the number of reports and services required; and outsourcing financial management operations. None of these choices is realistic, the majority of respondents said, but the most likely is an across-the-board cut to program budgets.

World stocks mixed amid bargain-hunting vs caution - Yahoo Finance

BANGKOK (AP) -- Asian stocks eked out gains Thursday as traders hunted for bargains after sharp selling in recent days, but markets in Europe fell amid intensifying fears of a messy exit by Greece from the euro common currency.

Greece called a new round of elections for June 17 after coalition talks to form a government fell apart. The president said depositors were pulling hundreds of millions of euros out of banks, weakening the country's strained financial system.

The developments fueled fears that Greece would exit the euro currency and shake global markets. In elections earlier this month, Greek voters punished parties that supported tough austerity measures needed to secure international bailout money.

But analysts at Credit Agricole CIB in Hong Kong said the scheduling of new Greek elections suggested "a reduction in near-term uncertainties" that could lead to some relief for volatile markets.

Britain's FTSE 100 fell 0.4 percent to 5,380.72 in early trading. Germany's DAX fell 0.2 percent to 6,373.01 and France's CAC-40 lost 0.2 percent to 3,042.45.

U.S. stocks were set for a moderately higher opening, with Dow Jones industrial futures up 0.3 percent at 12,610. S&P 500 futures rose 0.4 percent to 1,327.

In Asia, stock markets enjoyed a slight rebound as investors went bargain-hunting, analysts said.

Japan's Nikkei 225 climbed 0.9 percent to close at 8,876.59 after the country posted better-than-expected growth figures for the first quarter. South Korea's Kospi added 0.3 percent to 1,845.24. Benchmarks in Taiwan, New Zealand and the Philippines also rose.

Australia's S&P/ASX 200 slipped 0.2 percent to 4,157.40, dragged down by financial stocks. Hong Kong's Hang Seng closed 0.3 percent down at 19,200.93.

Mainland Chinese shares bounced back from early losses, buoyed by calls from the country's central bank governor, Zhou Xiaochuan, for market reforms.

The benchmark Shanghai Composite Index rose 1.4 percent to 2,378.89. The Shenzhen Composite Index also gained 1.4 percent to 954.95. Shares in brokerages, financial and trading-related companies led the gains.

Positive news on the U.S. economy on Wednesday underpinned sentiment in Asia. Construction of homes in April rose 2.6 percent from March, and U.S. factory production increased 0.6 percent in April, helped by a gain in auto production.

Some Japanese stocks saw big gains amid news that the country's economy grew at an annualized 4.1 percent for the January-March quarter thanks to a rebound in consumer spending.

Sharp Corp. jumped 5.7 percent and Mazda Motor Corp. added 3.8 percent. Steel company JFE Holdings shot up 5.5 percent.

Benchmark oil for June delivery was up 52 cents to $93.33 per barrel in electronic trading on the New York Mercantile Exchange. On Wednesday, the contract fell by $1.17 to finish at a seven-month low of $92.81 per barrel in New York.

In currencies, the euro fell to $1.2715 from $1.2725 late Wednesday in New York. The dollar rose to 80.35 yen from 80.29 yen.


AP researcher Fu Ting contributed from Shanghai.

ePlus to Restate Financial Results for Prior Periods - Yahoo Finance

HERNDON, Va., May 31, 2012 (GLOBE NEWSWIRE) -- ePlus inc. (Nasdaq:PLUS - News) today announced that the Company will restate its consolidated financial statements for the fiscal years ended March 31, 2010 and 2011, and the quarterly financial statements for the three quarters ended June 30, September 30, and December 31, 2011 and all of the quarters in the fiscal year ended March 31, 2011. For the periods affected by the restatement, the Company's restated financial statements will report revenues from the sale of third party software assurance, maintenance and services on a net basis rather than on a gross basis, as previously reported. The Company expects that the correction of this error will have no effect on its previously reported earnings, earnings per share, or consolidated statements of cash flows. Additionally, the Company has identified an unrelated error in connection with lease revenue reported prior to 2010 that will have an immaterial effect on its previously reported consolidated balance sheets and consolidated statements of stockholders' equity.

In each fiscal year during the restatement period, the Company expects the effect of the gross vs. net revenue accounting change to decrease previously reported "sales of product and services" and "cost of sales, products and services." As a result of the reporting change to a net basis, the Company also expects gross profit to remain unchanged and gross margin to increase. The Company expects its financial results for the quarter ended March 31, 2012 to reflect similar revenue and cost of sales adjustments.

Presentation of Sales of Third Party Software Assurance, Maintenance and Services

During the preparation of its financial statements for the fiscal year ended March 31, 2012, and after discussions with Deloitte & Touche LLP, its independent registered public accounting firm, the Company reassessed the presentation of sales of third party software assurance, maintenance and services and, after giving further consideration with respect to gross vs. net reporting, concluded that these transactions should be presented on a net basis. The Company previously presented these transactions consistent with its revenue recognition policy, originally implemented during fiscal year 2006, on a gross basis, primarily as a result of the Company's determination that it was acting as a principal in these arrangements as the customer contracts are with ePlus and not with third party service providers. However, it has recently been determined that ePlus should be considered as an agent in these transactions because third party service providers are responsible for the day to day provision of services under these contracts. This change in the determination of that status results in a different accounting treatment of the revenue resulting from the sale of such third party software assurance, maintenance and services, requiring the revenue to be reported net of the associated cost of the underlying contracts with the third party service providers.

Under net sales recognition, the cost paid to a third party service provider is recorded as a reduction to sales of related products and services, resulting in net sales being equal to the gross profit on a transaction. The Company does not expect any changes to earnings before provision for income tax, net earnings, or net earnings per common share or consolidated statements of cash flows. In addition, the Company expects that the changes to the consolidated balance sheets and consolidated statements of stockholders' equity will be immaterial. The restatement will not have any impact on the Company's underlying agreements with, or obligations to, its customers and third party service providers, nor will the restatement affect the amount that the Company invoices its customers.


As a result of the foregoing, on May 24, 2012, the Audit Committee of the Company's Board of Directors concluded, in consultation with and upon the recommendation of the Company's management, and after consulting with outside advisors, that investors should no longer rely upon the Company's previously issued financial statements and related audit reports of its independent registered public accounting firm, Deloitte & Touche LLP, for the restatement period identified above. The Company expects to file restated financial statements as described below to correct the Company's presentation of sales of third party software assurance, maintenance and services. The Audit Committee and management have discussed these matters with the Company's independent registered public accounting firm.

Until the restatement is complete, the expected effects of the restatement are subject to change. It is possible that additional issues may be identified during the course of the review and audit processes. Any additional items that may be identified during the completion of the review and audit process could be material to the Company's financial condition and results of operations for the years ended March 31, 2010 and 2011, and each of the three quarters ended December 31, 2011 and each of the quarters in fiscal year ended March 31, 2011.

Management is continuing to assess the effect of the restatement on the Company's internal control over financial reporting and its disclosure controls and procedures. Management will report its conclusion on internal control over financial reporting and disclosure controls and procedures upon completion of the restatement process.

As soon as practicable, the Company intends to file its Annual Report on Form 10-K for the year ended March 31, 2012, which will include restated audited financial statements for the years ended March 31, 2010 and 2011, for each of the three quarters ended December 31, 2011 and for each of the quarters in the fiscal year ended March 31, 2011. The Company will also include in the Form 10-K restated selected financial data for the years ended March 31, 2008 through 2011.

About ePlus inc.

ePlus is a leading provider of technology solutions. ePlus enables organizations to optimize their IT infrastructure and supply chain processes by delivering world-class IT products from top manufacturers, managed and professional services, flexible lease financing, proprietary software, and patented business methods and systems. Founded in 1990, ePlus has more than 800 associates serving federal, state, municipal, and commercial customers nationally. The Company is headquartered in Herndon, VA. For more information, visit http://www.eplus.com/, call 888-482-1122, or email info@eplus.com.

ePlus(R) and ePlus products referenced herein are either registered trademarks or trademarks of ePlus inc. in the United States and/or other countries. The names of other companies and products mentioned herein may be the trademarks of their respective owners.

Forward-Looking Statements

Statements in this press release that are not historical facts may be deemed to be "forward-looking statements" including the expected effects of the restatement. Actual and anticipated future results may vary materially due to certain risks and uncertainties, including, without limitation, unanticipated accounting issues or audit issues regarding the financial data for the periods to be restated or adjusted; inability of the Company or its independent registered public accounting firm to confirm relevant information or data; unanticipated issues that could prevent or delay the Company's independent registered public accounting firm from concluding the audit or requiring additional efforts, procedures or review; the Company's ability to design, improve or remediate, as necessary, internal controls to address identified issues; possible adverse effects resulting from the recent financial crisis in the credit markets and general slowdown of the U.S. economy such as our current and potential customers delaying or reducing technology purchases, increasing credit risk associated with our customers and vendors, reduction of vendor incentive programs, the possibility of additional goodwill impairment charges, and restrictions on our access to capital necessary to fund our operations; the demand for and acceptance of, our products and services; our ability to adapt our services to meet changes in market developments; our ability to adapt to changes in the IT industry.

US STOCKS-Dow turns negative for year after jobs report - Reuters UK

Fri Jun 1, 2012 6:08pm BST

* May payrolls report well short of expectations

* China PMI falls, adding to global growth fears

* Mining stocks rare gainers as gold prices jump

* Dow negative for 2012, S&P finds support

* Indexes down: Dow 1.7 pct, S&P 1.9 pct, Nasdaq 2.2 pct (Updates to afternoon trading)

By Ryan Vlastelica

NEW YORK, June 1 (Reuters) - U.S. stocks plunged on Friday after a troublingly weak jobs report added to fears about a global economic slowdown and sent the Dow into negative territory for the year.

The report was the latest in a string of bearish data, and came alongside signs of slowing in China's economy. The benchmark S&P, hovering around its 200-day moving average, posted its biggest daily decline since December and was on track for its fourth weekly loss of the last five.

The Labor Department said employers created a paltry 69,000 jobs last month, the weakest in a year, while the unemployment rate rose to 8.2 percent. Economists polled by Reuters had expected non-farm payrolls to increase 150,000.

China's economy showed signs of a broadening slowdown as its official purchasing managers' index fell to 50.4 in May from April's 13-month high of 53.3, signaling a deeper-than-forecast deterioration in demand at home and abroad.

"Risks are elevated when you see numbers like this, especially when coupled with weak data from overseas," said Brad Sorensen, director of market and sector analysis at Charles Schwab in Denver. "There's a concern the global economy is slowing."

Data released later in the session was less bleak. U.S. construction spending rose 0.3 percent in April as private residential construction increased at the fastest pace in six months.

The Institute for Supply Management said its index of national factory activity slipped to 53.5 from 54.8 in April, just missing expectations for 53.9, but the new orders gauge improved to its highest level in over a year.

The Dow Jones industrial average was down 212.26 points, or 1.71 percent, at 12,181.19. The Standard & Poor's 500 Index was down 25.16 points, or 1.92 percent, at 1,285.17. The Nasdaq Composite Index was down 60.98 points, or 2.16 percent, at 2,766.36.

The benchmark S&P index moved closer to its 200-day moving average at 1,284.75, a significant technical level which could trigger more selling if breached.

In Europe, Markit's Eurozone Manufacturing Purchasing Managers' Index dropped to 45.1 in May from 45.9 in April.

Investor concern has been rising about the stability of Spain's banking system and the euro zone as a whole, at the same time U.S. data has shown tepid economic growth.

The worries sent the benchmark S&P 500 index down 6.3 percent in May and investors fleeing to safe-haven government securities.

Banking shares dropped on Friday, with JPMorgan Chase & Co down 3.2 percent to $32.10 and Bank of America Corp down 4.1 percent to $7.05. The KBW bank index declined 4.1 percent.

More than four-fifths of stocks traded on both the New York Stock Exchange and the Nasdaq were lower while all 10 S&P sectors fell. Gold prices climbed more than 3 percent, creating one of the few bright spots on Wall Street. Newmont Mining surged 7.7 percent to $50.80 while Freeport-McMoRan Copper & Gold rose 1 percent to $32.37.

Homebuilders were among the weakest of the day, comprising the top three percentage decliners on the S&P 500. Pulte Group Inc plunged 11 percent to $8.34 while D.R. Horton Inc lost 9.2 percent to $15.08 and Lennar Corp was off 8.3 percent at $25.03.

(Editing by Dave Zimmerman)

Stocks Skid 2%, Dow Negative for 2012; Vix Soars - CNBC

Stocks suffered their worst day of the year, with the Dow tumbling into negative territory for 2012, after a disappointing jobs report in addition to dismal data from China and Europe fueled fears over the health of the global economy.

Whether the stock selloff continues through the summer "really depends on the government," said Doug Roberts, managing partner at Channel Capital Research. "If [the Fed] starts making news about QE3, than you can start to see this [selloff] is going to be relatively short-lived."

The Dow Jones Industrial Average plunged 274.88 points, or 2.22 percent, to end at 12,118.57, led by H-P [HPQ  Loading...      ()   ] and AmEx [AXP  Loading...      ()   ].

The S&P 500 tumbled 32.29 points, or 2.46 percent, to finish at 1,278.04. The Nasdaq plummeted 79.86 points, or 2.82 percent, to close at 2,747.48. Both the S&P and Nasdaq entered correction territory from their 2012 highs.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, surged more than 10 percent to close above 26.

For the week, the Dow dropped 2.70 percent, the S&P 500 declined 3.02 percent, and the Nasdaq erased 3.17 percent.

All 10 S&P sectors finished negative for the week, led by energy.

The U.S. added just 69,000 new jobs in May while the unemployment rate grew to 8.2 percent, fueling speculation that the Fed might be prompted to intervene with another round of quantitative easing. Economists polled by Reuters had expected nonfarm payrolls to increase 150,000 and the jobless rate to hold steady at 8.1 percent.

"It's painfully obvious the economic recovery in the U.S. isn't just slowing down, it's pulling up the emergency brake," said Todd Schoenberger, managing principal The BlackBay Group.

Also on the economic front, construction spending rose a less-than-expected 0.3 percent and the Institute for Supply Management's manufacturing index also came in light at 53.5—still in expansion territory but reflective of a slowdown.

"We think it is increasingly likely the Fed will announce another round of QE at the Aug. 1 or Sept. 13 meeting," Michelle Meyer, senior economist at Bank of America Merrill Lynch, told clients in a note. "The Fed will not sit idle as the economy slows." (Read More: Why More Fed Easing Might Not Help Much Now)

Bond yields found new historic depths, with the 10-year Treasury note yield dropping below 1.5 percent and the 30-year bond touching its all-time low, while energy prices hit three-year lows as well and metals including gold surged.

Adding to woes, China's slowdown worsened in May as its factories saw a further deterioration in demand at home and abroad. The darkening outlook was underlined by data showing the fourth monthly decline this year in exports from South Korea, as shipments to the United States, Europe and China all fell.

Oil prices fell to their lowest since October 2011, while gold surged more than 4 percent to trade above $1,620 an ounce, logging its biggest one-day gain in more than two years as investors rushed to the yellow metal as a safe-haven.

Gold mining stocks were sharply higher, with Barrick Gold [ABX  Loading...      ()   ] leading the way and Newmont Mining [NEM  Loading...      ()   ] topping the S&P 500 performers.

European shares finished sharply lower amid lingering fears over the debt-ridden economies of Greece and Spain.

This comes after Spain unveiled Thursday that almost 100 billion euros ($123.25 billion) had left the country in the first three months of the year and the head of the European Central Bank (ECB) lambasted its handling of Bankia, the nation's troubled lender.

Meanwhile, Facebook [FB  Loading...      ()   ] tumbled to finish in negative territory, plummeting nearly 27 percent from its market debut of $38 a share. The social networking giant posted the biggest two-week loss of any IPO deal worth over $1 billion since 1995.

Groupon [GRPN  Loading...      ()   ] .o>slumped after the IPO lock-up on the stock sales by insiders of the company ended. Insiders are typically prevented from selling for six months after an IPO.

Beacon Federal Bancorp [BFED  Loading...      ()   ] was also a rare stock trading in positive territory, after the company said it will be acquired by Berkshire Hills Bancorp [BHLB  Loading...      ()   ] for $132 million.

And Hughes Telematics [HUTC  Loading...      ()   ] soared on news that Verizon [VZ  Loading...      ()   ] would buy the company for $612 million in cash, or $12 a share to beef up its enterprise business.

—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

On Tap Next Week:

MONDAY: Factory orders; Earnings from Dollar General
TUESDAY: ISM non-mfg index; earnings from Hovnanian
WEDNESDAY: Weekly mortgage apps, ECB announcement, productivity and costs, oil inventories, Fed's Beige Book, Fed's Lockhart speaks, Fed's Lockhart speaks, Fed Basel III vote
THURSDAY: Bank of England announcement, jobless claims, Bernanke speaks, quarterly services survey, Fed's Lockhart speaks, Fed's Kocherlakota speaks, consumer credit; Earnings from Lululemon Athletica, JM Smucker
FRIDAY: International trade, wholesale trade, Fed's Kocherlakota speaks, Chesapeake annual meeting

More From CNBC.com:

Energy stocks hit eight-month lows; BP shines - Marketwatch

By Jim Jelter, MarketWatch

SAN FRANCISCO (MarketWatch) — Weak U.S. economic data and another steep selloff in crude oil drove energy stocks to eight-month lows Friday.

A disappointing May employment report from the U.S. Labor Department triggered the decline. According to the report, the U.S. economy added 69,000 jobs last month, far fewer than economists had expected and less than what’s needed to accommodate those entering the work force for the first time.

The weak jobs data fanned concerns that the economy’s still struggling to make significant headway, which in turn bode badly for energy demand.

That fear was reflected in the underlying commodities market. July crude-oil futures /quotes/zigman/2203147 CLN2 -3.78%  fell $3.30, or 3.8%, to settle at $83.23 a barrel on the New York Mercantile Exchange. For the week, the July contract fell 8.4%, ending at the lowest level since Oct. 7. Read the latest on oil futures.

The NYSE Arca Oil Index /quotes/zigman/6015539 XX:XOI -1.82%  fell 1.8%, holding up slightly better than the 2.2%, 274-point plunge seen in the Dow Jones Industrial Average /quotes/zigman/627449 DJIA -2.22% . The oil index last visited these levels in early October.

BP PLC /quotes/zigman/247026/quotes/nls/bp BP +0.82%  was the lone gainer in the group, up 30 cents to a closing level of $36.76. The London-based company said it plans to pursue the sale of its 50% interest in TNK-BP after receiving an unsolicited bid for its stake in the giant Russian joint-venture stake.

Industry analysts say the deal, if it goes through, could be worth as much as $30 billion, though valuing BP’s Russian assets is tricky given the oil market’s recent volatility. Read about BP's plans to sell its BP-TNK stake.

The NYSE Arca Natural Gas index /quotes/zigman/6015474 XX:XNG -3.54%  fell 3.5% to 568.52 points, with shares of Chesapeake Energy Corp. /quotes/zigman/126832/quotes/nls/chk CHK -7.81%  falling 7.8% to $15.58. Chesapeake posted the biggest percentage decline in the group Friday.

For the week, the natural-gas index fell 4.7%.

Shares of oil-field-service companies fared only marginally better. The Philadelphia Oil Service Sector Index /quotes/zigman/1470028 OSX -2.36%  fell 2.4% to 196.02 points. For the week, however, the index dropped nearly 5.7%, making it the worst-performing sector within energy stocks.

Offshore driller Noble Corp. /quotes/zigman/479523/quotes/nls/ne NE -2.17%  and oil-field-services company Weatherford International /quotes/zigman/504342/quotes/nls/wft WFT -2.16%  both lost more than 9% of their share price this week as investors pulled money out of companies catering to a well-supplied market that has been roiled this past week by a flood of negative economic news from around the world.


Stocks plummet after disappointing jobs, manufacturing reports - Los Angeles Times

Stocks tanked Friday morning amid a host of sour economic news that showed slower-than-expected job growth and manufacturing.

The Dow Jones industrial average plunged more than 200 points, down 1.6% to 12,188.8 in morning trading in New York, erasing its gains for the year after the two reports were released.

Standard & Poor’s 500 index was down 25 points, or nearly 2%, to 1,285.2. Nasdaq saw a 58-point slide, down 2% to 2,769.8.

The first piece of bad news came when the Labor Department said employers added just 69,000 jobs in May, less than half of what analysts were anticipating and the smallest gain in a year. The unemployment rate rose for the first time in nearly a year, to 8.2% in May.

Then the Institute for Supply Management said its index of American factory activity came in under expectations, dipping to a level of 53.5 in May from 54.8 in April.

On the plus side, the group’s index for new orders showed a 13-month high. The Commerce Department showed construction spending rising. Though personal income growth lagged, consumer spending was up, according to the department.

But investors were spooked nonetheless. They fled to the safety of U.S. government bonds and gold. Treasury prices soared, sending bond yields down to record lows. The price of the safe-haven precious metal jumped 3% to a morning high of $1,616.80 per ounce after falling in recent weeks to the mid-$1,500s.

June gloom indeed.


U.S. jobs report takes on outsize significance

Europe debt crisis dragging world economies down

Unemployment rises to 8.2% in May as job growth stalls again

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Stocks erase most of 2012 gains after jobs report - Reuters

NEW YORK | Fri Jun 1, 2012 7:30pm EDT

NEW YORK (Reuters) - Stocks fell more than 2 percent on Friday, dragging the Dow into negative territory for the year after a dismal U.S. jobs report added to fears that Europe's spiraling debt crisis was dragging down the world economy.

The S&P 500 closed at its lowest since early January and ended below its 200-day moving average for the first time in 2012 after the Labor Department said employers created just 69,000 jobs last month, the weakest in a year.

The bleak May jobs report caps a week of soft economic data from China and growing problems in Europe as Spain's bank crisis deepened.

The global flight to safety pushed U.S. and German government debt yields to record lows while the VIX .VIX, a gauge of U.S. stock market anxiety, jumped more than 20 percent for the week.

"The vast majority of investors are choosing to panic," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.

"It's been pretty clear for the last year that Europe was going to be a drag for the global economy."

Though steep, Jacobsen said he would view the pullback as a buying opportunity unless it pushed the S&P 500 below 1,250.

The Dow Jones industrial average .DJI fell 274.88 points, or 2.22 percent, to 12,118.57 at the close. The S&P 500 Index .SPX dropped 32.29 points, or 2.46 percent, to 1,278.04. The Nasdaq Composite .IXIC dropped 79.86 points, or 2.82 percent, to 2,747.48.

The benchmark S&P 500 ended below its 200-day moving average, which was 1,284.53 late Friday afternoon.

Friday's decline was the largest daily percentage drop for the S&P 500 since November 9, when a spike in Italian benchmark bond yields sent the broad U.S. stock index down 3.7 percent.

For the week, the Dow fell 2.7 percent, the S&P 500 lost 3 percent and the Nasdaq dropped 3.2 percent.

Financial sector stocks were among the worst hit in Friday's selloff, with the KBW bank index .BKX down 4.9 percent, its largest daily drop since early November.

"Most investors don't think the problem in Europe is going to infect the U.S. economy as much as it would the U.S. financial system," Wells Fargo's Jacobsen said.

JPMorgan Chase & Co (JPM.N) fell 3.7 percent to $31.93 and Bank of America Corp (BAC.N) slid 4.5 percent to $7.02.

More than six issues fell for every one that rose on the New York Stock Exchange, while on the Nasdaq, more than five stocks fell for every one that advanced.

Homebuilders ranked among the weakest stocks. Pulte Group (PHM.N) plunged 11.8 percent to $8.26 while D.R. Horton (DHI.N) lost 8.4 percent to $15.21. The PHLX housing sector index .HGX fell 6.3 percent, but it was still up nearly 14 percent for the year.

In one of the few positive moves of the day, Newmont Mining (NEM.N) surged 6.7 percent to $50.30 and Barrick Gold (ABX.N) added 7.3 percent to $41.91 as the price of gold scored its biggest one-day rise in slightly more than three years. <GOL/>

More than 8.3 billion shares changed hands on the New York Stock Exchange, the Nasdaq and Amex, about 21 percent higher than the year-to-date daily average of 6.85 billion shares.

(Reporting by Rodrigo Campos,; Editing by Dave Zimmerman and Jan Paschal)

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