NEW YORK, April 11 — The selloff in US stocks accelerated yesterday, as the Dow and S&P 500 dropped for a fifth day, with the pullback coming on the cusp of earnings season.
The slide marked the S&P 500’s worst day since December 8. The declines were the largest losses this year in terms of both points and per centage drops for each of the three major US stock indices.
All S&P 500 sectors ended solidly lower, with industrial and materials names suffering the biggest drops. About 80 per cent of shares listed on the New York Stock Exchange and the Nasdaq Stock Market ended lower.
The major US stock indices each fell more than 1.5 per cent, pushing the S&P 500 below its 50-day moving average of 1,372.30, an area viewed as a significant support level that will make or break the current uptrend.
“Dropping below that level suggests a loss of momentum, and it looks pretty widespread,” said Katie Stockton, chief market technician at MKM Partners in Greenwich, Connecticut. The S&P 500 could fall to about 1,350 before finding a new level of support, she added.
The Nasdaq also slid below its 50-day moving average and closed below 3,000 for the first time since March 12.
Concerns about European debt have resurfaced and could be a catalyst for further declines as the yields on riskier Italian and Spanish debt climbed. US-listed shares of Banco Santander fell 3 per cent to US$6.51.
Dow component Alcoa Inc climbed 5.4 per cent to US$9.82 in extended trading after the aluminium maker reported its quarterly results.
With 5 per cent of the S&P 500 components having already reported, profits are seen rising 3.1 per cent in the quarter, according to the Thomson Reuters Director’s Report.
“We’ve clearly seen a major slowdown in earnings, which are dependent on global growth now that profit margins have stopped expanding, and global growth isn’t great right now with all the issues in Europe,” said Jim McDonald, chief investment strategist at Northern Trust Global Investments in Chicago, which has about US$650 billion (RM2 trillion) in assets under management.
The Dow Jones industrial average lost 213.66 points, or 1.65 per cent, to 12,715.93 at the close. The Standard & Poor’s 500 Index dropped 23.61 points, or 1.71 per cent, to 1,358.59. The Nasdaq Composite Index tumbled 55.86 points, or 1.83 per cent, to 2,991.22.
Volume was higher than average, with about 8.18 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, above last year’s daily average of 7.84 billion.
The CBOE Volatility Index jumped 8.4 per cent to 20.39, and was up for the eighth straight day, its longest streak of consecutive gains in nearly nine years. At its session high, the VIX touched 21.06 — up almost 12 per cent for the day.
The Standard & Poor’s 500 Index is still up 8 per cent so far this year — compared with its gain of 12 per cent at the end of the first quarter.
But the benchmark index has fallen 4 per cent in the past five sessions, its worst streak since November, as investors questioned the economy’s strength and the US Federal Reserve’s inclination to keep easy money flooding into the market.
Friday’s soft US payrolls report added to the US stock market’s recent losses that were sparked by last Tuesday’s minutes from the Fed’s March policy meeting. The Fed’s minutes were interpreted as showing the central bank was less than keen to launch more stimulus.
A Reuters poll on Monday showed most major Wall Street banks expect anaemic growth in the US job market and a struggling economic recovery to force the Fed to undertake another round of monetary stimulus.
Apple shares dropped quickly from hitting a new high of US$644 per share to briefly top a US$600 billion market capitalisation. Its stock later fell to trade down 1.2 per cent at US$628.44 at the close.
Supervalu Inc shares jumped 15.2 per cent to US$6.13 after the third-largest US supermarket operator reported better than expected earnings and issued a full-year profit forecast above Wall Street’s view.
Best Buy shares hit their lowest since December 2008 and were at their session low after chief executive Brian Dunn resigned after 28 years with the world’s largest consumer electronics retail chain. The stock fell 5.9 per cent to US$21.32, not far above the intraday low of US$21.21. — Reuters