U.S. equities concluded trading near the lows for the day. The S&P 500 finished down 2.1% or 41 points at 1,928. The Nasdaq Composite closed down 2% or 90 points at 4,378. The Dow Jones Industrial Average ended down 2% or 335 points at 16,659.
All three major stock indices dropped as much as 1.9% in intraday trading Thursday in one of the most precipitous equity selloffs of 2014. Stock began the day in the red and never recovered.
With about two hours to go until the closing bell the S&P 500 was still down 1.9% to 1,932 points and the Nasdaq Composite was down 1.9% to 4,386, these declines will rank among the ten worst days of the year so far. The Dow Jones Industrial Average was down 1.8% or 309 points to 16,685. Earlier in the day the Dow down as much at 334 points, the largest point loss of the year and among the worst days on a percentage basis.
Meanwhile the VIX – the Chicago Board Options Exchange’s Volatility Index — was up close to 20.5% to 18.2, hitting its highest level since March. The Dow mirrored the volatility index with three straight days of swings greater than 200 points for the first time in three years, dropping as much as 334 points on Thursday. The 10-year Treasury note, on the other hand, was more or less flat at 2.33.
TD Ameritrade Chief Strategist JJ Kinahan points to growing volatility as a sign investors are “coming home to roost,” in others words they are heeding caution and taking profit as nerve-wracking tales of geopolitical risk, Ebola and a strong dollar dominate headlines.
Yet the lack of movement on the long end of the bond yield curve tells Kinahan the downward momentum may not last more than a few weeks. Instead of long term bonds, traders are moving into cash and short term notes signaling they may be taking time to digest Wednesday’s Fed minutes and waiting out the first weeks of earnings season for a “sneak peak.”
On Wednesday Alcoa's third quarter earnings report signaled the unofficial start to earnings season. The aluminum producer showed 8% revenue growth and a 20 cent jump in earnings per share. The stock popped following the after-hours news but quickly reversed course with the rest of the market Thursday as shares declined around 4.5%. (See, “Alcoa Profit Triples On Higher Aluminum Prices And Demand” for more on Alcoa’s earnings results.)
Clearly one early earnings season success was not enough to bolster investor expectations. Alcoa, which was kicked out of the Dow last year, doesn’t hold the sway it once did. Investors may be holding out to see how financial services companies perform since they interact with a larger swath of the economy. JPMorgan Chase , Wells Fargo and Citigroup are all scheduled to release earnings on Tuesday, October 14. Bank of America , Goldman Sachs Group and several other financial bigwigs are set to report later next week. The S&P 500 Financials were down about 2% Thursday. - Forbes, October 9, 2014http://klse.i3investor.com/blogs/sharingiscaring/61507.jsp
